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testified as to petitioners’ total reliance on Mr. Goltz and the
other professionals hired with respect to the accounting and tax
preparation functions. Respondent, in seeking to counter this
defense, focuses in particular on an alleged lack of competence
on the part of Mr. Goltz. Petitioners in retort devote
substantial discussion to why their reliance on a professional
who essentially “duped” them was nonetheless reasonable. The
Court, however, is unconvinced that questions of Mr. Goltz’s
competency are sufficiently central to this issue to warrant the
emphasis placed thereon by the parties.
The deficiencies at issue were determined from the positions
reported in the amended returns for 1996, 1997, and 1998 prepared
on behalf of petitioners by Mr. Leo. Any reliance was therefore
necessarily placed in significant part on Mr. Leo. No one has
addressed Mr. Leo’s competency in this proceeding. Matters of
competency, i.e., the first prong of the above-quoted test, thus
become more tangential to our analysis.
The second prong, on the other hand, lies at the crux of
petitioners’ entitlement to the relief sought. Petitioners must
establish that they provided necessary and accurate information
with respect to all items reported on their tax returns, such
that it can be said that the incorrect returns resulted from
error on the part of the adviser(s). See, e.g., Westbrook v.
Commissioner, supra at 881; Ma-Tran Corp. v. Commissioner, supra
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