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before respondent discovered the failure to make the section
475(f) election. Regarding section 301.9100-3(b)(1)(iii),
Proced. & Admin. Regs., pertaining to the exercise of reasonable
diligence, we note that while petitioner had practiced law for
over 30 years, he had only been in business as a securities
trader for approximately 3 months at the time respondent contends
he should have made his section 475(f) election; i.e., April 17,
2000. Within a day of learning of the section 475(f) election
from Dr. Sullivan, petitioner contacted a new accountant, Mr.
Sellers. Mr. Sellers was also unaware of section 475(f), but
petitioner retrieved the citation of section 475(f) from Dr.
Sullivan and provided it to Mr. Sellers. Petitioner also
immediately hired Caplin & Drysdale to file the section 475(f)
election and request section 9100 relief.
Regarding section 301.9100-3(b)(1)(v), Proced. & Admin.
Regs., which finds good faith where the taxpayer acts in
reasonable reliance upon counsel, petitioner was a personal
injury lawyer for over 34 years, not a tax lawyer, and relied on
accountants for tax advice throughout his professional career.
In relying on Mr. Pearce, petitioner had no reason to question
Mr. Pearce’s qualifications as a qualified tax professional.13
13We note that, although whether petitioner’s reliance was
reasonable is not an issue, sec. 301.9100-3(b)(2), Proced. &
Admin. Regs., places a limit on reasonable reliance on a
qualified tax professional. A taxpayer will not be considered to
(continued...)
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