InterTAN, Inc. - Page 25

                                       - 25 -                                         
          and in good faith depends on the pertinent facts and circum-                
          stances, including the taxpayer's efforts to assess such tax-               
          payer’s proper tax liability, the knowledge and experience of the           
          taxpayer, and the reliance on the advice of a professional, such            
          as an accountant.  Sec. 1.6664-4(b)(1), Income Tax Regs.  Reli-             
          ance on the advice of a professional, such as an accountant, does           
          not necessarily demonstrate reasonable cause and good faith                 
          unless, under all the circumstances, such reliance was reasonable           
          and the taxpayer acted in good faith.  Id.  In this connection, a           
          taxpayer must demonstrate that its reliance on the advice of a              
          professional concerning substantive tax law was objectively                 
          reasonable.  Chamberlain v. Commissioner, 66 F.3d 729, 732-733              
          (5th Cir. 1995), affg. in part and revg. in part T.C. Memo. 1994-           
          228; Goldman v. Commissioner, 39 F.3d 402, 408 (2d Cir. 1994),              
          affg. T.C. Memo. 1993-480.  In the case of claimed reliance on              
          the accountant who prepared the taxpayer's tax return, the                  
          taxpayer must establish that correct information was provided to            
          the accountant and that the item incorrectly omitted, claimed, or           
          reported in the return was the result of the accountant's error.            
          Westbrook v. Commissioner, 68 F.3d 868, 881 (5th Cir. 1995),                
          affg. T.C. Memo. 1993-634; Weis v. Commissioner, 94 T.C. 473, 487           
          (1990); Ma-Tran Corp. v. Commissioner, 70 T.C. 158, 173 (1978).             
               In the instant case, respondent determined that there was an           
          understatement of $5,004,095 in petitioner’s 1993 return that was           

Page:  Previous  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  Next

Last modified: May 25, 2011