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early April, 2000. As of April 14, 2000, petitioner’s net
trading losses totaled $25,196,151.54. After his account was
liquidated on April 14, 2000, petitioner held no securities in
his DLJdirect, Ameritrade, or Terra Nova accounts.
Throughout his career, petitioner used certified public
accountants to advise him on Federal tax matters and to prepare
his Federal tax returns. J. Wray Pearce (Mr. Pearce), a
certified public accountant with over 30 years of experience, had
served as petitioner’s business and personal accountant for over
13 years. Mr. Pearce had visited petitioner’s home several times
and was very familiar with petitioner’s securities trading
business. He had seen all of petitioner’s trading-related
computers and equipment, helped hire some of the employees in
petitioner’s securities trading business, and reviewed daily
calculations of petitioner’s securities trading.
On April 13, 2000, Mr. Pearce met with petitioner to obtain
his signature on Form 4868, Application for Automatic Extension
of Time to File U.S. Individual Income Tax Return, for the
taxable year 1999. On April 17, 2000, petitioner timely filed
Form 4868, requesting an extension until August 15, 2000, to file
his return for taxable year 1999. A section 475(f) election was
not enclosed with the Form 4868. Because Mr. Pearce did not know
about the applicability of section 475(f) or any related Internal
Revenue Service (IRS) revenue procedure to securities traders,
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