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cause and good faith exception. United States v. Boyle, supra at
250-251; Weis v. Commissioner, 94 T.C. 473, 487 (1990). However,
reliance on the advice of a professional tax adviser does not
necessarily demonstrate reasonable cause and good faith. Sec.
1.6664-4(b)(1), Income Tax Regs. All facts and circumstances
must be taken into account. Sec. 1.6664-4(c)(1), Income Tax
Regs. The advice must be based upon all pertinent facts and the
applicable law. Sec. 1.6664-4(c)(1)(i), Income Tax Regs. The
advice must not be based on unreasonable factual or legal
assumptions. Sec. 1.6664-4(c)(1)(ii), Income Tax Regs. The
advice cannot be based on an assumption that the taxpayer knows,
or has reason to know, is unlikely to be true. Id.
At the close of the trial of this case, the Court instructed
petitioners to address on brief the particular advice from Mr.
Loeser on which they were relying to show reasonable cause and
good faith with respect to each of the conceded items of
underreported taxable income. In their briefs, petitioners
address only the transaction involving the fictitious payments to
Mr. Loeser or one of his affiliates and resulting in the
erroneous credits to Mr. Oria’s drawing account. We assume,
therefore, that they concede their reasonable cause and good
faith defense with respect to the remaining conceded items of
underreported taxable income. Mendes v. Commissioner, 121 T.C.
308, 312-313 (2003) (“If an argument is not pursued on brief, we
may conclude that it has been abandoned.”).
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