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of all of the facts and circumstances, including the
experience, knowledge, and education of the taxpayer.” Id.
Petitioner asserts that she acted with reasonable cause
and in good faith, pointing out that: (1) In 1994,
petitioner was audited “on this same issue for the same
business” and received a no-change letter; and (2)
petitioner consulted with Mr. Wessman, a C.P.A., who
prepared her Federal income tax returns for the years in
issue.
While petitioner did receive a no-change letter with
respect to her horse activity during 1991 and 1992, the
audit focused on the passive activity rules of section 469.
Because this case focuses on the hobby loss rules of section
183, the no-change letter received in 1994 cannot serve as a
basis for reasonable cause.
Reliance upon the advice of an expert tax preparer may
demonstrate that a taxpayer acted with reasonable cause and
good faith in the context of section 6662(a). Freytag v.
Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011
(5th Cir. 1990), affd. 501 U.S. 868 (1991); see sec. 1.6664-
4(c)(1), Income Tax Regs. Petitioner provided Mr. Wessman
with the annual profit and loss statements prepared by Ms.
Pope. Respondent has conceded that these statements were
adequate to substantiate all of petitioner’s claimed
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