- 12 -
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
items.11
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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