Alex and Tonja Oria - Page 13

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          were incorrect, since he had neither paid Mr. Loeser or one of              
          his affiliates directly nor had he reimbursed Medico.  A taxpayer           
          cannot stick his head in the sand while an adviser explains the             
          basis of his advice and pop it out only to hear the favorable               
          conclusion.  Considering all the facts and circumstances, we                
          conclude, and find, that petitioners did not act with reasonable            
          cause and in good faith in relying on Mr. Loeser to prepare a               
          correct income tax return for them.  The underpayment in tax                
          attributable to the $248,524 in checks received from Medico and             
          not reported on the Form 1040 is due to negligence, and there is            
          not reasonable cause, nor did petitioners act in good faith, with           
          respect to that portion of the underpayment.                                
               We sustain the accuracy-related penalty determined by                  
          respondent with respect to petitioners’ underpayment of tax for             
                                                  Decision will be entered            
                                             under Rule 155.                          

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