                                                                  United States Court of Appeals
                                                                           Fifth Circuit
                                                                         F I L E D
                     UNITED STATES COURT OF APPEALS
                          FOR THE FIFTH CIRCUIT                        December 8, 2004

                          _______________________                   Charles R. Fulbruge III
                                                                            Clerk
                                No. 04-60225
                          _______________________

                                 INTERTAN INC,

                                                     Petitioner-Appellant,

                                    versus

                    COMMISSIONER OF INTERNAL REVENUE,

                                                      Respondent-Appellee.



               Appeal from the United States Tax Court
                               9599-02


Before GARWOOD, JONES, and PRADO, Circuit Judges.

PER CURIAM:*

           InterTan,      Inc.   (“InterTan”)    appeals    the    tax    court’s

assessment     of    an   accuracy-related       penalty    for     substantial

underpayment of tax liability based on InterTan’s 1993 tax return.

We AFFIRM the judgment of the Tax Court.

           A determination as to whether a taxpayer acted with

reasonable reliance and in good faith is reviewed for clear error.

Srivastava v. Commissioner, 220 F.3d 353, 367 & n.42 (5th Cir.

2000).     Whether    substantial    authority     exists   for      treating      a

transaction in a given manner is a mixed question of law and fact.



     *
            Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
Therefore, legal conclusions are subject to de novo review, and

factual determinations are reviewed for clear error.                   Westbrook v.

Commissioner, 68 F.3d 868 (5th Cir. 1995).

           An   accuracy-related       penalty     will    not    apply     when   a

taxpayer, acting in good faith, reasonably relies on professional

advice   with   respect    to   the    tax     treatment    of     a    particular

transaction.    TREAS. REG. § 1.6664-4(b)(1).         This inquiry is fact-

specific and made on a “case-by-case basis.”                     Id.     “The most

important factor is the extent of the taxpayer’s effort to assess

the taxpayer’s proper tax liability.”          Id. Any reliance on profes-

sional tax advice also presupposes that the taxpayer gave the

advisor all information material to the tax return and any key

transactions. See Westbrook v. Commissioner, 68 F.3d 868, 881 (5th

Cir. 1995).

           The Tax Court’s factfindings on the diligence of InterTan

and the reasonableness of its reliance on PriceWaterhouse are

supported by the record.        The absence of any documentation that

PriceWaterhouse    was    aware   of       ITC’s   financial      condition    and

testimony by a PriceWaterhouse employee at trial demonstrates that

the accountants were unaware of the arrangement between InterTan

and the Royal Bank.       The Tax Court’s findings cannot be clearly

erroneous.

           In the alternative, InterTan asserts, contrary to the Tax

Court’s decisions, that it had “substantial authority” that the

transaction was lawful and thus no penalty should have been imposed

                                       2
by the Commissioner. See 26 U.S.C. §§ 6662(d)(1), (2); Treas. Reg.

§§ 1.6662-4(a), (b), (d)(2).      InterTan relies on two cases as sub-

stantial authority for its tax treatment of the transaction.            In

Soreng v. Commissioner, 158 F.2d 340 (7th Cir. 1946) and Crellin’s

Estate v. Commissioner, 203 F.2d 812 (9th Cir. 1953), courts

treated distributions to shareholders that were held briefly, with

the money being returned to the corporation, as dividends for tax

purposes.      In Soreng, however, the agreement was between a third-

party lender and the shareholders themselves; the shareholders were

free to choose their own arrangements, and the overall arrangement

had an independent business purpose.           In Crellin’s Estate, a

holding company rescinded a dividend after learning that the tax

advice triggering the dividend payment was incorrect.          203 F.2d at

813.        Crellin is readily distinguishable because the company

undeniably declared a dividend and then later revoked it based on

an agreement with its shareholders.      The issue whether the payment

constituted a dividend in the first instance was not before the

court.       By contrast, in this case, InterTan set up the entire

transaction and directed the conduct of the other players, all

subject to the underlying obligation to the Royal Bank.         The cases

are    so    fundamentally   distinguishable   as   not   to   amount   to

substantial authority.

              Because InterTan is unable to prevail on either claim of

error, the judgment of the tax court is AFFIRMED.



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