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accountant and tax return preparer. Moreover, nothing in the
record suggests that petitioners were not justified in their
reliance on Mr. Stienessen as a competent professional.
We next consider whether petitioners provided to Mr.
Stienessen necessary and accurate information for completion of
petitioners’ tax returns. Except for Mr. Stienessen’s and Mr.
Menard’s general testimony that Mr. Stienessen had necessary and
accurate information, petitioners did not present evidence on
this point.
Although petitioners may have believed that they supplied to
Mr. Stienessen all the information he needed, Mr. Stienessen
clearly did not have necessary and accurate information with
respect to the TMI expenses deduction and constructive dividend
issues. Menards’s books and records did not separately identify
the TMI expenses but, instead, lumped them together with
Menards’s own operating costs. As a result, Mr. Stienessen was
unable to properly assess whether Menards was claiming an
unreasonable amount of the TMI expenses as a deduction and paying
the excess as a constructive dividend to Mr. Menard.
Regarding the constructive receipt of interest income issue,
at trial, Mr. Stienessen testified that he did not report the
interest income on Mr. Menard’s 1998 tax return because Mr.
Menard was a cash basis taxpayer and received the check in 1999.
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