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described as “too good to be true.” Smith v. Commissioner, T.C.
Memo. 1997-503; sec. 1.6662-3(b)(1), Income Tax Regs.
Zane’s principal argument on this issue is that he relied on
his tax professional. This Schedule F situation is unlike the
one involving the noncash charitable contributions where
petitioners complied with their tax professionals’ requests and
the failure to properly comply with the procedural requirements
was the fault of the tax professionals. Zane was engaged in the
activity, and he is a sophisticated and successful business
professional. Zane was aware of his activities, losses, etc.,
and his tax professional merely prepared the returns (Schedules
F) from the financial information that Zane provided. The
reliance argument is not available to Zane and Shannon in this
instance.
Accordingly, we hold that Zane and Shannon were negligent,
within the meaning of section 6662, for failure to keep proper
books and records and generally for claiming Schedule F losses
for 1998, 1999, and 2000.
To reflect the foregoing and concessions by the parties,
Decisions will be entered
under Rule 155.
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