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Commissioner, 91 T.C. 524, 565 (1988); Edwards v. Commissioner,
T.C. Memo. 2002-169.
It is clear in this case that the advice petitioners
received, if any, concerning the partnership loss deduction that
resulted in the underlying deficiency was not objectively
reasonable. First, we note that petitioners have not established
that they received any advice at all concerning the deduction.
Although petitioners relied on Mr. Hoyt and his organization to
prepare the return, Ms. Hansen’s testimony and the other evidence
in the record does not suggest that petitioners directly
questioned Mr. Hoyt or his organization about the nature of the
tax claims. When petitioners signed the return, they did not
question or seek advice from anyone concerning the large
partnership loss at issue. Nevertheless, assuming arguendo that
petitioners did receive advice from Mr. Hoyt or someone within
his organization, any such advice that they received is in no
manner objectively reasonable. Mr. Hoyt and his organization
created and promoted the partnership, they completed petitioners’
tax return, and they stood to profit from doing so. For
petitioners to trust Mr. Hoyt or members of his organization for
tax advice and/or to prepare their returns under these
circumstances was inherently unreasonable.
In addition to relying on members of the Hoyt organization
itself, petitioners argue that they relied on tax professionals
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