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he knows, or should know, to be relevant to the proper tax
treatment of an item. Id.
The advice must not be based on unreasonable factual or
legal assumptions (including assumptions as to future events) and
must not unreasonably rely on the representations, statements,
findings, or agreements of the taxpayer or any other person.
Sec. 1.6664-4(c)(1)(ii), Income Tax Regs. For example, the
advice must not be based upon a representation or assumption
which the taxpayer knows, or has reason to know, is unlikely to
be true, such as an inaccurate representation or assumption as to
the taxpayer’s purposes for entering into a transaction or for
structuring a transaction in a particular manner. Id.
Petitioner points to the following items that he claims he
relied upon: (1) An August 27, 1996, memorandum from Gerald
Rokoff and Alvin Knott of Shearman & Sterling to Mr. Lerner; (2)
an August 30, 1996, memorandum from Messrs. Rokoff and Knott of
Shearman & Sterling to Mr. Lerner; (3) a February 21, 1997, draft
memorandum from Robert Feinberg and Jeffrey N. Bilskie of Ernst &
Young, LLP, to James Rhodes; (4) a May 12, 1997, memorandum of
Messrs. Rokoff and Knott of Shearman & Sterling to Messrs. Lerner
and Rhodes; (5) an October 10, 1997, memorandum from Messrs.
Rokoff and Knott of Shearman & Sterling to Mr. Lerner and Cynthia
Beerbower; (6) a February 26, 1998, memorandum from Mr. Knott of
Shearman & Sterling to Mr. Lerner; (7) a May 1, 1998, memorandum
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