Michael W. Keller - Page 26

                                       - 26 -                                         
               Petitioner argues:                                                     
               Hoyt made certain that Petitioner was aware of outside                 
               counsel by referencing outside counsel in newsletters                  
               and other documents * * *.  Hoyt made certain that                     
               Petitioner (and other Hoyt investors) were aware that                  
               Mr. MacDonald and Mr. Dismukes were the attorneys who                  
               had won Bales * * *.  In light of Petitioner’s lack of                 
               sophistication, his reliance on the tax professionals                  
               that won the Bales case is even more understandable.                   
               Therefore, the negligence penalty is also inappropriate                
               due to Petitioner[’s] reasonable reliance on the Hoyt                  
               outside advisors.                                                      
          Whether or not petitioner was aware that Hoyt had “outside                  
          advisors”, there is no evidence that petitioner sought or                   
          received advice directly from these “outside advisors”.  The                
          advisors were hired by Hoyt, and any advice that petitioner may             
          have received from them was filtered through Hoyt.                          
               Petitioner testified that he did not seek advice from tax              
          attorneys or accountants outside of the Hoyt organization.                  
          Petitioner’s reliance on Hoyt, Laguna, and persons hired by Hoyt,           
          coupled with his failure to seek independent advice, was                    
          unreasonable.                                                               
                    b.   Honest Misunderstanding of Fact                              
               Reasonable cause and good faith under section 6664(c) may be           
          indicated where there is “an honest misunderstanding of fact or             
          law that is reasonable in light of all the facts and                        
          circumstances, including the experience, knowledge and education            
          of the taxpayer.”  Sec. 1.6664-4(b)(1), Income Tax Regs.                    
          However, “reasonable cause and good faith is not necessarily                






Page:  Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  Next

Last modified: May 25, 2011