- 28 -
b. Reliance on the Bales Memorandum Opinion
Petitioner argues he had reasonable cause for his
underpayments of tax for 1989 and 1991 because he relied on Bales
v. Commissioner, T.C. Memo. 1989-568. We disagree. In addition
to the fact that petitioner by his own admission did not consult
an independent professional for advice on Bales, Bales involved
different participants, different partnerships, and different
years. Moreover, although petitioner may have read the Bales
Memorandum Opinion, we decline to find that he had any
understanding of or reliance on that case independent of what was
explained to him by the Hoyt organization. We conclude that any
reliance that petitioner placed on Bales was not reasonable.9
See Hansen v. Commissioner, 471 F.3d at 1032-1033; Mortensen v.
Commissioner, 440 F.3d 375, 391-392 (6th Cir. 2006), affg. T.C.
Memo. 2004-279; Sanders v. Commissioner, T.C. Memo. 2005-163.
9 Petitioner argues that he acted reasonably in that this
Court was unable to uncover Hoyt’s fraud and petitioner was in no
better position to evaluate the legitimacy of his participation
in TBS 89-1 or the tax benefits claimed therefrom. Petitioner is
misfocused in making this argument. The argument relates
improperly to the question (irrelevant herein) of whether
petitioner could or should have uncovered the fraud, rather than
to the relevant and decisive issue of whether he was negligent in
not adequately investigating the partnership and/or seeking
qualified independent advice concerning it. See Hansen v.
Commissioner, 471 F.3d at 1032-1033; Mortensen v. Commissioner,
440 F.3d at 389-390.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: November 10, 2007