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RBS was later justified by a statement made to him by an IRS
Appeals Officer who agreed that RBS was, in fact, a business.
Reliance upon the advice of an expert tax preparer may
demonstrate that a taxpayer acted with reasonable cause and good
faith in the context of section 6662(a). Freytag v.
Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th
Cir. 1990), affd. 501 U.S. 868 (1991); see sec. 1.6664-4(c)(1),
Income Tax Regs. Petitioner, however, did not seek the advice of
any such expert prior to the filing of the returns for the years
in issue, despite the fact that he was employed during these
years by the IRS. Petitioner did not testify that he honestly
believed that he could claim the expenses related to RBS in the
years at issue. Moreover, petitioner failed to produce any
books, records, or other work papers in response to respondent’s
six requests for information. Based on these facts, we conclude
that petitioner did not act with reasonable cause and in good
faith. Accordingly, we hold that petitioner is liable for the
accuracy-related penalties under section 6662(a).
In reaching our holdings, we have considered all arguments
and contentions made by the parties, and to the extent not
mentioned, we conclude that they are moot, irrelevant, or without
merit.
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