- 52 -
competent tax professionals, and the taxpayer’s efforts to assess
his proper tax liability. Sec. 1.6664-4(b)(1), Income Tax Regs.
Petitioner testified that before forming the trusts, he
spoke with his former tax return preparer, who was not familiar
with trusts, met with a company called the Independent Trust
Consultants, and “read as much material as [he] could from
libraries.” Petitioner also testified that he hired his tax
return preparer because she was “familiar with estates and trusts
[and] Form 1041”, but he did not ascertain her level of
education. The Gouveias introduced no other evidence of their
knowledge or degree of experience in tax matters. Moreover,
petitioner’s testimony does not establish that anyone with whom
the Gouveias consulted provided any advice upon which they relied
or that the Gouveias made any sincere effort to determine whether
the trust arrangement would be respected for Federal income tax
purposes. Because the Gouveias have not demonstrated that they
acted in good faith and that there was reasonable cause for the
underpayment, we sustain respondent’s determination that the
Gouveias are liable for the accuracy-related penalty under
section 6662(a) for 1995, 1996, 1997, and 1998 on any
underpayment of income tax attributable to unreported income from
the Pago and McKenzie Trusts.
Page: Previous 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 NextLast modified: May 25, 2011