- 8 -
provided necessary and accurate information to the adviser, and
(3) the taxpayer actually relied in good faith on the adviser’s
judgment. See Neonatology Associates, P.A. v. Commissioner, 115
T.C. 43, 99 (2000), affd. 299 F.3d 221 (3d Cir. 2002); Ellwest
Stereo Theatres, Inc. v. Commissioner, T.C. Memo. 1995-610.
Petitioner testified that he sought informal tax advice from
a Mr. Randolph, ostensibly a tax professional, at the time he
received the distribution. Petitioner, however, did not call Mr.
Randolph as a witness, nor did he introduce evidence which would
allow the Court to evaluate Mr. Randolph’s expertise. Petitioner
has not established that Mr. Randolph was a competent
professional who had sufficient expertise and information to
justify reliance.
Petitioner substantially understated his tax liability for
2003, since the understatement exceeded the greater of 10 percent
of the tax required to be shown on the return or $5,000. The
Court concludes that respondent has produced sufficient evidence
to show that the accuracy-related penalty under section 6662 is
appropriate. Nothing in the record indicates petitioner acted
with reasonable cause and in good faith. Respondent’s
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: November 10, 2007