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penalty, petitioner must establish that he had reasonable cause
and acted in good faith with respect to the claimed Schedule C
loss.
The general rule is that taxpayers have a duty to file
complete and accurate tax returns and cannot avoid the duty by
placing responsibility with an agent. United States v. Boyle,
469 U.S. 241, 252 (1985); Metra Chem Corp. v. Commissioner, 88
T.C. 654, 662 (1987). However, in limited situations, the good
faith reliance on the advice of an independent, competent
professional in the preparation of the tax return can satisfy the
reasonable cause and good faith exception. United States v.
Boyle, supra at 250-251; Weis v. Commissioner, 94 T.C. 473, 487
(1990). The reliance must be reasonable, in good faith, and
based on full disclosure. United States v. Boyle, supra at 250-
251; Weis v. Commissioner, supra.
Petitioner testified that the activity reported on Schedule
C was related to a pyramid scheme run by “The Tax People”.
Petitioner testified that he was recruited by participants in the
scheme and attended a seminar describing the activity.
Petitioner initially invested $300 and then paid $25 per month to
participate in the activity. The only way for petitioner to
accumulate money was if he recruited other people to join the
5(...continued)
are relatively minor in amount and do not impact the finding that
there was a substantial understatement of income tax.
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