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Cir. 1991), affg. in part and revg. in part T.C. Memo. 1989-390;
and Baxter v. Commissioner, 816 F.2d 493, 496 (9th Cir. 1987),
affg. in part and revg. in part T.C. Memo. 1985-378, for the
proposition that petitioners’ incorrect treatment of their trusts
for tax purposes does not in itself justify imposition of the
accuracy-related penalty. We disagree. None of those cases
involved a taxpayer’s claim of reliance on an accountant, and all
of the cases included factors favorable to the taxpayers which
are not present here. The taxpayers in both Kantor and Baxter
presented a viable (although ultimately unsuccessful) challenge
to the Commissioner’s adjustments. Kantor v. Commissioner, supra
at 1522-1523; Baxter v. Commissioner, supra at 496. Petitioners
did not. See, e.g., Neeley v. United States, 775 F.2d 1092 (9th
Cir. 1985); Zmuda v. Commissioner, supra; Schulz v. Commissioner,
686 F.2d 490, 493 (7th Cir. 1982), affg. T.C. Memo. 1980-568;
Markosian v. Commissioner, 73 T.C. 1235, 1241 (1980); Hanson v.
Commissioner, T.C. Memo. 1981-675, affd. per curiam 696 F.2d 1232
(9th Cir. 1983).
The taxpayers in Norgaard were held not negligent because
they used a reasonable accounting system to keep track of their
gambling losses and they did not lack due care or fail to do what
a reasonable and prudent person would do. Norgaard v.
Commissioner, supra at 880. Kantor, Norgaard, and Baxter do not
support petitioners.
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