                          T.C. Memo. 2005-54



                        UNITED STATES TAX COURT



          CASPIAN CONSULTING GROUP, INC., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18124-03.              Filed March 23, 2005.


     William E. Taggart, Jr., for petitioner.

     Patricia Montero, for respondent.



                MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:     Respondent determined the following

deficiencies in and accuracy-related penalty on petitioner’s

Federal income taxes:

                                             Penalty
         Year           Deficiency         Sec. 6662(a)

         1999           $2,133                   --
         2000           43,698                 $8,740
                                - 2 -

After concessions,1 we must decide whether petitioner is liable

for the accuracy-related penalty pursuant to section 6662(a)2 for

2000.

                          FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time the petition

was filed, petitioner’s principal place of business was in San

Francisco, California.

     Petitioner hired Cameron & Rolling, an accounting firm, to

prepare its 2000 Federal income tax return.    Petitioner’s

business grew rapidly in 2000, and Cameron & Rolling required a

substantial amount of time to review petitioner’s financial

records.    Cameron & Rolling examined petitioner’s financial

records to “[clean] up the books” and ensure compliance with GAAP

and to prepare the records to file an accurate Federal income tax

return.    A Cameron & Rolling accountant spoke with petitioner’s

owners about “the usage of the plane to determine if we could

fully depreciate it and deduct the expenses associated with the

plane.”



     1
          Petitioner conceded the deficiencies for 1999 and 2000.
     2
        Unless otherwise indicated, all section references are to
the Internal Revenue Code.
                                - 3 -

     On its 2000 Federal income tax return, petitioner deducted

the following amounts for the acquisition and operation of an

airplane:   Operating expenses of $23,033, interest expenses of

$29,742, and depreciation of $128,289.      Respondent disallowed

these deductions and determined that petitioner was liable for an

income tax deficiency of $43,698 and an accuracy-related penalty

of $8,740 for 2000.

                               OPINION

     Pursuant to section 6662(a), a taxpayer may be liable for a

penalty of 20 percent on the portion of an underpayment of tax

(1) due to negligence or disregard of rules or regulations or (2)

attributable to a substantial understatement of tax.        Sec.

6662(b).    Whether applied because of a substantial understatement

of tax or negligence or disregard of rules or regulations, the

accuracy-related penalty is not imposed with respect to any

portion of the underpayment as to which the taxpayer acted with

reasonable cause and in good faith.      Sec. 6664(c)(1).    The

decision as to whether the taxpayer acted with reasonable cause

and in good faith depends upon all the pertinent facts and

circumstances.   Sec. 1.6664-4(b)(1), Income Tax Regs.       Relevant

factors include the taxpayer’s efforts to assess his proper tax

liability, including the taxpayer’s reasonable and good faith

reliance on the advice of a professional such as an accountant.

See id.
                                 - 4 -

     It is clear from the record that petitioner provided Cameron

& Rolling all records and information necessary to prepare the

2000 Federal income tax return and claim the deductions set forth

on the return.   A Cameron & Rolling accountant conversed with

petitioner’s owners to determine that the depreciation and

expenses related to the airplane could be deducted.       Petitioner

relied upon Cameron & Rolling to prepare the return, and Cameron

& Rolling was aware of petitioner’s reliance.       It is clear from

the record that petitioner reasonably relied in good faith on

Cameron & Rolling.   Consequently, we conclude that for the year

in issue petitioner had reasonable cause and acted in good faith

as to any underpayment resulting from the deductions in issue.

Accordingly, we hold that petitioner is not liable for the

penalty pursuant to section 6662(a).

     To reflect the foregoing,


                                              Decision will be entered

                                         for petitioner as to the 2000

                                         penalty and for respondent as

                                         to the deficiencies.
