- 14 -
function as a substitute for compliance with an unambiguous
statute.”). Such reliance does not serve as an “absolute
defense”; it is merely “a factor to be considered.” Freytag v.
Commissioner, supra at 888. The caselaw sets forth the following
three requirements in order for a taxpayer to use reliance on a
tax professional to avoid liability for a section 6662(a)
penalty: “(1) The adviser was a competent professional who had
sufficient expertise to justify reliance, (2) the taxpayer
provided necessary and accurate information to the adviser, and
(3) the taxpayer actually relied in good faith on the adviser's
judgment.” See Neonatology Associates, P.A. v. Commissioner, 115
T.C. 43, 99 (2000), affd. 299 F.3d 221 (3d Cir. 2002).
In this case, the notice of deficiency included the
imposition of a $1,316.40 penalty under section 6662(a) and
(b)(1).8 In her arguments regarding the section 6662(a) penalty,
petitioner does not contest that, in the event that the Court
would find against her regarding the taxability of the alimony,
she substantially understated her 2003 income tax.
Petitioner argues that she is not liable for the penalty
because (1) section 71(b)(1)(D) and paragraph 14(f) of the MDA
are substantial authority for her position that the $26,400 paid
8 The notice of deficiency refers only to sec. 6662(a) and
(b)(1). It does not refer to sec. 6662(b)(2), which provides for
the imposition of a sec. 6662 penalty for any substantial
understatement of income tax. Respondent raises the substantial
underpayment issue in his pretrial memorandum and briefs.
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