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Petitioners dispute the imposition of the penalty.
According to petitioners, the penalty should not apply because
they relied on the advice of a paid income tax preparer.
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). 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). However,
reliance on the advice of a professional tax adviser does not
necessarily demonstrate reasonable cause and good faith. See
sec. 1.6664-4(b)(1), Income Tax Regs. All facts and
circumstances must be taken into account. Sec. 1.6664-4(c)(1),
Income Tax Regs. The advice must be based upon all pertinent
facts and the applicable law. Sec. 1.6664-4(c)(1)(i), Income Tax
Regs. The taxpayer cannot establish reasonable reliance if he
fails to disclose facts that the taxpayer knows, or should know,
are relevant to the proper tax treatment of an item. Id. The
advice must not be based on unreasonable factual or legal
assumptions. See sec. 1.6664-4(c)(1)(ii), Income Tax Regs.
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