J. Ramsay Farah and Elizabeth Farah - Page 28

          determination is incorrect.  Higbee v. Commissioner, supra at               
               Petitioners failed to keep adequate records related to their           
          business expenses, claimed highly inflated deductions,                      
          misreported the gain from the sale of the Berlin house, and                 
          failed to report the substantial gain from the sale of the South            
          Point Road lot.  Therefore, respondent has met his burden of                
               An accuracy-related penalty is not imposed on any portion              
          of the understatement as to which the taxpayer acted with                   
          reasonable cause and in good faith.  Sec. 6664(c)(1).  Reliance             
          on the advice of a tax professional may constitute reasonable               
          cause and good faith, if under all the facts and circumstances              
          the reliance is reasonable and in good faith.  Neonatology                  
          Associates, P.A. v. Commissioner, 115 T.C. 43, 98 (2000), affd.             
          299 F.3d 221 (3d Cir. 2002); sec. 1.6664-4(c)(1), Income Tax                
          Regs.  To qualify for this exception, a taxpayer must prove by a            
          preponderance of the evidence:  (1) The adviser was a                       
          competent professional who had sufficient expertise to justify              
          reliance; (2) the taxpayer provided necessary and accurate                  
          information to the adviser; and (3) the taxpayer actually relied            
          in good faith on the adviser’s judgment.  Neonatology Associates,           
          P.A. v. Commissioner, supra at 98-99.                                       

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