G. Kierstead Family Holdings Trust, et al. - Page 5

               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 that:  (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.                                       
               Petitioners contend that their reliance on attorneys Kallman           
          and Carter relieves them from the accuracy-related penalties.  We           
          disagree.  Respondent has not disputed that petitioners satisfied           
          part (2) of the 3-prong test.  Accordingly, the issue to be                 
          determined is whether petitioners actually relied in good faith             
          on the advice of competent tax professionals possessing                     
          sufficient expertise to justify their reliance.                             
               In 2001, petitioners consulted Mr. Kallman, an attorney with           
          24 years’ experience regarding the trusts.  Mr. Kallman does not            

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