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89 T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990),
affd. 501 U.S. 868 (1991). To be considered a defense to
negligence, the taxpayer’s reliance must be reasonable. Id. To
be objectively reasonable, the advice generally must be from
competent and independent parties unburdened with an inherent
conflict of interest, not from the promoters of the investment.
Mortensen v. Commissioner, 440 F.3d 375, 387 (6th Cir. 2006),
affg. T.C. Memo. 2004-279; Van Scoten v. Commissioner, 439 F.3d
1243, 1253 (10th Cir. 2006), affg. T.C. Memo. 2004-275; Goldman
v. Commissioner, 39 F.3d 402, 408 (2d Cir. 1994), affg. T.C.
Memo. 1993-480; LaVerne v. Commissioner, 94 T.C. at 652; Rybak v.
Commissioner, 91 T.C. 524, 565 (1988); Hansen v. Commissioner,
T.C. Memo. 2004-269.
Petitioner argues that he reasonably and in good faith
relied on Hoyt as an enrolled agent, on Laguna to prepare his
returns, and on “Hoyt’s outside advisors.” Petitioner places
strong emphasis on Hoyt’s status as an enrolled agent. However,
any significance that such status may have is clearly outweighed
by the fact that Hoyt was the creator and promoter of the
investment scheme. Petitioner’s reliance on Hoyt and his
organization, including Laguna, was not objectively reasonable
because Hoyt and his organization created and promoted the
investment, they completed petitioner’s tax returns, and they
received 75 percent of the refunds petitioner received.
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