Eugene A. Sanders - Page 12

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          underlying investment and due care in the claiming of the                   
          deduction.”  Sacks v. Commissioner, 82 F.3d 918, 920 (9th Cir.              
          1996), affg. T.C. Memo. 1994-217; Greene v. Commissioner, supra.            
          “When an investment has such obviously suspect tax claims as to             
          put a reasonable taxpayer under a duty of inquiry, a good faith             
          investigation of the underlying viability, financial structure,             
          and economics of the investment is required.”  Roberson v.                  
          Commissioner, T.C. Memo. 1996-335 (citing LaVerne v.                        
          Commissioner, 94 T.C. 637, 652-653 (1990), affd. without                    
          published opinion 956 F.2d 274 (9th Cir. 1992), affd. without               
          published opinion sub nom.  Cowles v. Commissioner, 949 F.2d 401            
          (10th Cir. 1991)), affd. without published opinion 142 F.3d 435             
          (6th Cir. 1998); Horn v. Commissioner, 90 T.C. 908, 942 (1988).             
               Petitioner contends that he is not liable for the section              
          6662(a) accuracy-related penalty because he had reasonable cause            
          to believe that his claimed tax treatment with respect to his               
          Hoyt investment was proper.  Petitioner specifically argues that            
          at the time he filed his 1991 return, he reasonably relied on the           
          Court’s opinion in Bales v. Commissioner, T.C. Memo. 1989-568, as           
          substantial authority for the tax treatment of the partnership              

               11  We note that there is no explicit “substantial                     
          authority” exception to the sec. 6662(a) accuracy-related penalty           
          for negligence.  Hillman v. Commissioner, T.C. Memo. 1999-255               
          n.14 (citing Wheeler v. Commissioner, T.C. Memo. 1999-56).                  

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