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do not need to reach the issues of whether the resulting
underpayments were substantial or were due to negligence because
we find petitioner had reasonable cause and acted in good faith.
A taxpayer’s reliance on the advice of a professional as to
the tax treatment of certain items does not automatically
constitute reasonable cause. Neonatology Associates v.
Commissioner, 115 T.C. 43, 98-99 (2000), affd. 299 F.2d 221 (3d
Cir. 2002); see sec. 1.6664-4(c)(1), Income Tax Regs. For a
taxpayer to reasonably rely on the advice of a professional, the
taxpayer must show: (1) The adviser was a competent professional
who had sufficient expertise to justify reliance; (2) the
taxpayer provided necessary and accurate information to the
adviser; and (3) the taxpayer actually relied in good faith on
the adviser’s judgment. Neonatology Associates v. Commissioner,
supra at 98-99.
Mr. Rolling has a B.A. in business administration and a
master’s degree in taxation. He is a licensed C.P.A. and has
been practicing for more than 20 years. During the years in
issue, Mr. Rolling prepared tax returns for petitioner and
Caspian, and served as a general consultant to both on tax-
related issues. Throughout the course of Mr. Rolling’s
testimony, we found him to be a competent professional who had
sufficient expertise to justify petitioner’s reliance. Based
upon the testimony of petitioner and Mr. Rolling regarding the
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