James G. and Linda C. Jaroff - Page 19

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          Reporting losses from a transaction entered into in taxable year            
          1995 on their 1994 income tax return simply does not demonstrate            
          that petitioners exercised ordinary care and prudence in                    
          determining their tax obligation.                                           
              Petitioners argue that they relied in good faith upon the               
         tax advice and tax preparation services they received from Mr.               
         Hoyt and Laguna Tax Service, an entity operated by Mr. Hoyt.                 
         Although Mr. Hoyt was an enrolled agent authorized to practice               
         before the IRS, any tax advice from either Mr. Hoyt or Laguna Tax            
         Service cannot be characterized as advice from an independent and            
         competent tax professional.  Rather, such advice is better                   
         classified as sales promotion.  See Vojticek v. Commissioner,                
         T.C. Memo. 1995-444.  Since petitioners were required to remit to            
         the Hoyt cattle operation 75 percent of their tax refunds,                   
         representations made by Mr. Hoyt or Laguna Tax Service would                 
         clearly be self-serving and unreliable.  Petitioners did not                 
         consult any competent tax professional from outside the Hoyt                 
         cattle operation.                                                            
              For the foregoing reasons, we sustain respondent’s                      
         determinations that petitioners are liable for accuracy-related              
         penalties for 1994 and 1995.                                                 

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