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6662(b)(1). The accuracy-related penalty will not be applied to
any portion of an underpayment with respect to which the taxpayer
acted with reasonable cause and in good faith. Sec. 6664(c)(1).
A good-faith, reasonable reliance on the advice of an
independent, competent professional as to the tax treatment of an
item may meet this requirement. United States v. Boyle, 469 U.S.
241 (1985); sec. 1.6664-4(b), Income Tax Regs. Whether a
taxpayer relies on professional advice and whether such reliance
is reasonable hinge on the facts and circumstances of the case
and the law that applies to those facts and circumstances. Sec.
1.6664-4(c)(1), Income Tax Regs.
The record persuades us that petitioners relied in good
faith upon the tax advice given by Ms. Clark, petitioners’
accountant, when she prepared petitioners’ tax returns. Ms.
Clark is a C.P.A. licensed in the State of Georgia. Ms. Clark
was aware of Mrs. Smith’s history of losses. Further, while
after careful consideration, we conclude that Mrs. Smith was not
engaged in her direct marketing activities for profit, we do
recognize that there are indicia of someone operating a business
for profit, including the time spent on the activities and Mrs.
Smith’s out-of-pocket expenses for advertising. Finally, when
Mrs. Smith sought advice on the strategies promoted by
Renaissance and implemented them in her business, Ms. Clark
advised Mrs. Smith that they were legal. While we find this
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