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Mr. Pearce has over 30 years of experience in tax and accounting,
has held numerous leadership positions within his field and had
extensive knowledge of petitioner’s trading activities and losses
from those activities.
Section 301.9100-3(b)(3) provides three exceptions to the
general rule stated in paragraph (b)(1) above. A taxpayer will
be deemed not to have acted reasonably and in good faith if the
taxpayer:
(i) Seeks to alter a return position for which an
accuracy-related penalty has been or could be imposed
under section 6662 at the time the taxpayer requests
relief (taking into account any qualified amended
return filed within the meaning of � 1.6664-2(c)(3) of
this chapter) and the new position requires or permits
a regulatory election for which relief is requested;
(ii) Was informed in all material respects of the
required election and related tax consequences, but
chose not to file the election; or
(iii) Uses hindsight in requesting relief. If specific
facts have changed since the due date for making the
election that make the election advantageous to a
taxpayer, the IRS will not ordinarily grant relief. In
such a case, the IRS will grant relief only when the
taxpayer provides strong proof that the taxpayer’s
decision to seek relief did not involve hindsight.
The first two exceptions of section 301.9100-3(b)(3), Proced. &
Admin. Regs., do not apply. The parties dispute whether
13(...continued)
have reasonably relied on a qualified tax professional if the
taxpayer knew or should have known that the professional was not
(i) competent to render advice on the election, or (ii) aware of
all relevant facts.
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