                            146 T.C. No. 3



                  UNITED STATES TAX COURT



  MICHAEL JONES AND M. CHASTAIN JONES, Petitioners v.
   COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 27187-12.                         Filed February 9, 2016.



       Ps claimed above-the-line deductions under I.R.C. sec. 62 on
their 2008, 2009, and 2010 tax returns for expenses related to H’s
position as a public official. R examined Ps’ 2008, 2009, and 2010
returns and determined that while H was entitled to certain deductions
for expenses, he could deduct them only as unreimbursed employee
business expenses, which would not reduce Ps’ tax liability. R also
determined that Ps were liable for accuracy-related penalties under
I.R.C. sec. 6662(a).

       Held: Under I.R.C. sec. 62(a)(2)(C), a “fee based” public
official is an official who receives fees directly from members of the
public in compensation for services provided. H, a state-court judge,
is a public official but did not personally retain any of the money paid
as fees to him. Therefore, he is not a public official compensated on a
fee basis, and can deduct his unreimbursed employee business
expenses only below the line.

      Held, further, Ps are not liable for 20% accuracy-related
penalties under I.R.C. sec. 6662(a).
                                           -2-

      Stephen Edward Silver and Derek W. Kaczmarek, for petitioners.

      Alicia E. Elliott, for respondent.



      HOLMES, Judge: Michael Jones is an Arizona judge who claimed

deductions on his 2008, 2009, and 2010 tax returns for unreimbursed business

expenses related to his official position. The Commissioner argues that these

expenses should reduce only his taxable income, and not his adjusted gross

income, which means that the deductions would be less valuable. This is the

general rule for those who are employees, but Judge Jones argues that he falls

within an exception to this rule for employees in positions “compensated in whole

or in part on a fee basis.”

      The section of the Code on which he relies--section 62(a)(2)(C)--is one

which neither we nor any other court has ever analyzed and one we’ve mentioned

only once (and that was in a nonprecedential opinion).1




      1
        See Davis v. Commissioner, T.C. Summ. Op. 2010-89. (All section
references are to the Internal Revenue Code in effect for the years at issue. All
Rule references are to the Tax Court Rules of Practice and Procedure.)
                                         -3-

                               FINDINGS OF FACT

I.    Judge Jones

      In Arizona the governor appoints judges on the advice of a nominating

committee. After their appointment, judges face retention elections every four

years. As part of this process, judges undergo performance reviews every two

years. These reviews consist of a series of surveys from litigants, jurors, attorneys,

and even some citizens at large. The results are then passed to a special

commission of attorneys and judges who review the survey responses and make

their findings available to the public. The voters use information and feedback

gleaned from the surveys to make informed decisions about which judges to keep

on the bench.

      Judge Jones was appointed to the Maricopa County Superior Court in 1995.

He remained in that position during the tax years at issue; and even though he

retired in January 2012, the county’s chief judge still recalls him to active duty to

hear cases a couple days each month. He is highly regarded. Not only did he

never lose a retention election, but he has remained throughout his career one of

the highest scored judges in the largest county in Arizona.2


      2
       He did have one blemish on his record--he admitted that he never
volunteered for tax cases because he “never had an interest.”
                                         -4-

II.   Judge Jones’s Expenses

      The superior court is the general jurisdiction court for each county in

Arizona. The Maricopa County Superior Court handles civil cases over $1,000,

family law, juvenile matters, and felonies; and is also Arizona’s statewide tax

court. Ariz. Const. art. VI, sec. 14.

      Maricopa County Superior Court is funded in part by the collection of fees.3

See Ariz. Rev. Stat. Ann. sec. 12.284 (West 2003 & Supp. 2015). Individuals

must pay the superior court clerk fees for various case filings, petitions, writs, the

filing of any documents, and the issuance of any licenses or certificates. Id. The

county does not, however, receive fees paid for wedding ceremonies--judges are

allowed to collect those directly (although Judge Jones himself did not charge for

weddings during the years at issue).

      Maricopa County Superior Court judges are paid a regular salary--funded

equally by the county’s general fund and by the State.4 They receive regular



      3
        Arizona law (as in effect in 2008, 2009, and 2010) also sent some of the
fees collected to the Elected Officials’ Retirement Plan and to the county’s general
fund. See Ariz. Rev. Stat. Ann. sec. 12.284.03 (West 2003 & Supp. 2015).
      4
        Halfway through 2010 Maricopa County became responsible for 100
percent of Maricopa County judges’ salaries--meaning that for that tax year,
Arizona paid only about one-quarter of Judge Jones’s salary. See Ariz. Rev. Stat.
Ann. sec. 12-128 (West 2003).
                                          -5-

paychecks and a Form W-2 at the end of every year. Items like federal income tax

and state income tax are withheld from each paycheck. Judges are also eligible for

benefits provided by the state or the county--whichever they choose. Judge Jones,

like many other judges on the court, was a member of the Elected Officials’

Retirement Plan--he and other participating judges were informed yearly how

much fee revenue was paid over to fund the retirement plan. He began receiving

payments from the plan, however, only after his retirement in 2012.

      When Judge Jones began judging, his court’s budget allowed him to make

reasonable expenditures for supplies and even the occasional special request. But

steep spending cuts led to very tight budgets in Maricopa County during the years

at issue. To save jobs, the county slashed discretionary funds. Reimbursements

for court travel, for example, were limited to one annual, mandatory judicial

conference. And though judges could still get mileage for travel in their official

capacity, there was no longer a budget for office supplies or other equipment.

Despite these cuts, the county still lost 425 staff positions.

      The cutbacks were so severe that Judge Jones took it upon himself to make

up for some of the gap. For example, because he held so many pretrial

conferences in his chambers, he spent money decorating his office so that it would

appear more professional. When he needed a new computer monitor in his
                                        -6-

courtroom, he bought one himself. And in lieu of bonuses, he personally bought

gift cards for high performing members of his chambers staff to “encourage them”

and to “make them work harder.”

       Judge Jones was also in demand as a seminar speaker. He was invited

especially often to presentations on Maricopa County’s innovative Mental Health

Court, which he has played an important role in creating. This court was the

venue for competency cases, and many professionals in the State, both legal and

nonlegal, became interested in it. Though his attendance at these seminars was

encouraged to the extent that he would disseminate and bring back new ideas and

techniques, the court could not reimburse him. So Judge Jones paid his own way

to attend--bringing back new skills that eventually led to the creation of two other

“problem solving courts.” More basic expenditures included water (because the

court turned off the water fountains), snacks for employees, and batteries to keep

the court’s clocks working.

III.   Judge Jones’s Returns

       Judge Jones consulted with a tax professional before filing his returns for

the 2008 and 2009 tax years. His CPA came on the recommendation of several

other court employees, and Judge Jones--a meticulous recordkeeper--turned over

several boxes of documents to him each year. He and the CPA would then sit
                                       -7-

down and go through his receipts to determine what was deductible. Judge Jones

credibly testified that his CPA had researched the issue and advised him that these

unreimbursed expenses should be deductible above the line. For lack of a more

obvious place to put it, the CPA reported it on line 21 of Form 1040. And for

2008 and 2009, Judge Jones ultimately claimed deductions for his expenses on his

returns in two places: in a negative amount on line 21 on Form 1040 (“Other

income--As per IRC 7701(A)(26)”)--making his deductions above the line--and

(possibly as an alternative position) on line 21 (“Unreimbursed employee

expenses”) of Schedule A.

      Judge Jones prepared his 2010 return the same way with a different

accountant--his first CPA had died. This new accountant, also a CPA, agreed with

the old one that a judge’s unreimbursed expenses should be allowed as an above-

the-line deduction. The only difference in his advice was where to claim that

deduction. So for 2010 Judge Jones claimed his deduction on line 24 of Form

1040 (“Certain business expenses of reservists, performing artists, and fee-basis

government officials”) per the advice of his CPA. Judge Jones currently maintains

that all of his deductions belong “above the line” on line 24 of his Form 1040.

      The Commissioner initially disallowed Judge Jones’s deductions in full.

Later, the parties agreed that several deductions would be allowed. Though the
                                         -8-

Commissioner still contends that many of the expenses aren’t deductible, the

primary issue for decision is whether Judge Jones is considered an official

compensated on a “fee basis.”5 We tried the case in Arizona, where Judge Jones

has resided ever since he filed his petition.

                                      OPINION

I.    Background: Section 162 and Section 62

      Section 162 allows deductions for trade and business expenses. Section

62(a)(1) allows deductions for those expenses to be made from gross income in

computing AGI except for those expenses incurred by a taxpayer as an employee.

A taxpayer who is an employee may instead deduct his unreimbursed employee

business expenses in computing his taxable income only to the extent that they

exceed 2% of his adjusted gross income (AGI). Secs. 162(a), 67(a); Orvis v.

Commissioner, 788 F.2d 1406, 1408 (9th Cir. 1986), aff’g T.C. Memo. 1984-533.

      Section 62(a)(2), though, carves out five narrow exceptions to this general

rule. The one that this case is about is in section 62(a)(2)(C) and is an exception

for unreimbursed business expenses “paid or incurred with respect to services


      5
         Judge Jones produced all his records at trial. We bifurcated the case, with
this opinion coming first, because the parties agree that the remaining disputes
about particular expenses would affect Judge Jones’s deficiency only were we to
rule in his favor on the question we address here.
                                         -9-

performed by an official as an employee of a State or political subdivision thereof

in a position compensated in whole or in part on a fee basis.” The parties agree

that at least some of Judge Jones’s expenses are allowed by section 162, that he is

an employee of Arizona, and that he incurred these expenses with respect to his

services. The sole issue for us to decide is whether Judge Jones is “in a position

compensated in whole or in part on a fee basis.” To figure that out, we need to

decide what it means to be compensated on a fee basis and then whether any of

Judge Jones’s compensation comes from fees. If we decide against Judge Jones’s

position, the Commissioner wants to add penalties to any underpayments.

II.   Defining “Fee Basis”

      The Commissioner wants us to interpret “compensated on a fee basis” to

mean something like “paid by a member of the public for a service rendered by a

judge who receives the fee.” Judge Jones argues that “in a position compensated

in whole or in part on a fee basis” means something like “a position funded in

whole or in part by fees paid by members of the public for services rendered by

judges.” Neither the Code nor the regulations define what “fee basis” means, and

the case law is similarly stubborn in its silence.

      We begin with the text of the statute. We afford a statute its plain and

ordinary meaning. Crane v. Commissioner, 331 U.S. 1, 6 (1947); Yari v.
                                       - 10 -

Commissioner, 143 T.C. 157, 164 (2014); Dobra v. Commissioner, 111 T.C. 339,

345 (1998). We avoid interpretations that “would produce absurd or unreasonable

results.” Yari v. Commissioner, 143 T.C. at 164 (quoting Union Carbide Corp. v.

Commissioner, 110 T.C. 375, 384 (1998)). And we interpret statutes “in their

context and with a view to their place in the overall statutory scheme.” FDA v.

Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (quoting Davis v.

Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989)).

      We begin with the dictionary. “Compensation” has two common meanings.

The first is an award or recompense for an injury, as when we say someone injured

by a tortfeasor or whose property is taken by the government is entitled to

“compensation.” See Black’s Law Dictionary 301 (8th ed. 2004); see also

Webster’s Third New International Dictionary 463 (2002). The second is

something of value--usually money, though it’s common enough for economists

and businessmen to speak of “nonwage compensation,” exchanged for the

provision of services. See, e.g., Gillian Lester, “A Defense of Paid Family Leave,”

28 Harv. J. L. & Gender 1 (2005); John A. Litwinski, “Human Capital Economics

and Income,” 21 Va. Tax Rev. 183 (2001); see also Black’s Law Dictionary 301;

Webster’s Third New International Dictionary 463.
                                       - 11 -

      Exchange in the sense of a balancing of accounts is the key here, as when

Thoreau spoke metaphorically: “If we will be quiet and ready enough, we shall

find compensation in every disappointment.” I To Myself: An Annotated

Selection from the Journal of Henry D. Thoreau 10 (Jeffrey S. Cramer ed., Yale

Univ. 2007). Or Emerson:

      Human labor, through all its forms, * * * is one immense illustration
      of the perfect compensation of the universe. The absolute balance of
      Give and Take, the doctrine that every thing has its price,--and if that
      price is not paid, not that thing but something else is obtained, and
      that it is impossible to get any thing without its price,--is not less
      sublime in the columns of a ledger than in the budgets of states, in the
      laws of light and darkness, in all the action and reaction of
      nature. * * *

Ralph Waldo Emerson, Compensation, in The Selected Works of Ralph Waldo

Emerson (Graphic Arts Books ed., 2011).

      These ordinary uses of “compensation” to mean “something of value given

in exchange for” are echoed elsewhere in the law. Section 1402(c) defines the

term “trade or business” for the purposes of self-employment income. It says:

      Trade or Business.--The term “trade or business,” when used with
      reference to self-employment income or net earnings from
      self-employment, shall have the same meaning as when used in
      section 162 (relating to trade or business expenses), except that such
      term shall not include--

                   (1) the performance of the functions of a public office,
            other than the functions of a public office of a State or a
                                        - 12 -

             political subdivision thereof with respect to fees received in
             any period in which the functions are performed in a position
             compensated solely on a fee basis * * * [Emphasis added.]

      There’s nothing useful in the section 1402 regulations on this question, but

the Commissioner does have some subregulatory guidance. Revenue Ruling 74-

608, 1974-2 C.B. 275, construes compensation by fees the same way the

Commissioner wants us to in this case. It says that a public official is

compensated by “fees” if he receives them directly from members of the public,

but not if he is paid from a government fund. Id. If the “public official receives

his remuneration or salary from a government fund and no portion of the monies

collected by him belongs to or can be retained by him as compensation, the

remuneration is not ‘fees’ under section 1402(c)(1).”6 Id., 1974-2 C.B. at 276.

Note that, although section 1402(c) refers to officials compensated solely on a fee

basis and section 62 refers to officials compensated in whole or in part on a fee




      6
         We aren’t bound by revenue rulings, but we pay attention to them based
on “their persuasiveness and the consistency of the Commissioner’s position over
time.” Webber v. Commissioner, 144 T.C. __, __ (slip op. at 48) (2015) (noting
what administrative lawyers call Skidmore deference); see Skidmore v. Swift &
Co., 323 U.S. 134, 140 (1944). (And we let taxpayers rely on them even more,
because we treat revenue rulings “as concessions by the Commissioner where
those rulings are relevant to our disposition of the case,” so that taxpayers may
rely on favorable ones. Rauenhorst v. Commissioner, 119 T.C. 157, 171 (2002).)
                                         - 13 -

basis, the difference has no effect on the meaning of the more general phrase

“compensated soley on a fee basis.”

          Moreover, section 3401(a) also distinguishes between “fees” and wages

paid to public officials. Section 31.3401(a)-2(b)(1) of the regulations under that

section distinguishes between those public officials compensated by fees and those

who receive salaries from the government:

             (b) Fees paid a public official.--(1) Authorized fees paid to
      public officials such as notaries public, clerks of courts, sheriffs, etc.,
      for services rendered in the performance of their official duties are
      excepted from wages and hence are not subject to withholding.
      However, salaries paid such officials by the Government, or by a
      Government agency or instrumentality, are subject to withholding.

      Other federal laws give us even more hints--for example, the Social Security

Administration adopted a definition (identical to the one that the Commissioner

used in his revenue ruling) for applying section 218 of the Social Security Act:7

      When a public official receives remuneration for services in the form
      of a “fee” directly from members of the public with whom he or she
      does business, that is considered to be a “fee.” Otherwise, if payment
      is made to a public official from government funds, and no portion of
      the monies collected by him or her belongs to or can be retained by
      him or her as compensation, that remuneration is not considered to be
      a “fee.”


      7
         Section 218 of the Social Security Act allows the Social Security
Administration to enter into an agreement with any state to provide Social Security
benefits to its employees. 42 U.S.C. sec. 418(a)(1) (2006). If a state asks, these
agreements exclude those who are compensated on a fee basis. Id. subsec. (c)(3).
                                       - 14 -

Social Security Administration, Title II: State & Local Coverage--

Commissioner’s Ruling on Definition of A “Fee” for Social Security Coverage

Purposes Under Section 218 of the Social Security Act. SSR 92-4P (Mar. 20,

1992), available at https://www.socialsecurity.gov//OP_Home/rulings/oas.

      The Fair Labor Standards Act (FLSA) generally requires employers to pay

employees overtime when they work more than 40 hours in a week. 29 U.S.C. sec.

207(a)(1) (2006). But the FLSA regulations exclude some professional employees

compensated on a fee basis from that requirement. 29 C.F.R. sec. 541.300(a)

(2009). These regulations also provide that

      [a]n employee will be considered to be paid on a “fee basis” within
      the meaning of these regulations if the employee is paid an agreed
      sum for a single job regardless of the time required for its completion.
      These payments resemble piecework payments with the important
      distinction that generally a “fee” is paid for the kind of job that is
      unique rather than for a series of jobs repeated an indefinite number
      of times and for which payment on an identical basis is made over
      and over again. Payments based on the number of hours or days
      worked and not on the accomplishment of a given single task are not
      considered payments on a fee basis.

Id. sec. 541.605(a).

      We also have to conclude that the Commissioner’s position is the more

reasonable one. An enormous number of government agencies, courts,

departments, and boards receive fee income. See, e.g., Tax Court Rules of
                                        - 15 -

Practice and Procedure App. II (U.S. Tax Court filing fee). If Judge Jones’s

construction of section 62(a)(2)(C) were correct, all the positions in all these

government bodies would be “position[s] compensated in whole or in part on a fee

basis.” This would create a caste of employees--those employed as government

“officials”--who would be exempt from the rule Congress chose to enact that

limits the deductibility of unreimbursed employee expenses. Maybe Congress

could do that, but it didn’t do so plainly. Business expenses are also usually

thought deductible because they are an ordinary and necessary requirement for

producing income. But Judge Jones’s reading of section 62 would uncouple the

deductibility of an expense from the income it produces--once a position was

funded in part by fees, any employee holding that position would be entitled to

unlimited deduction of his unreimbursed business expenses regardless of whether

those expenses had anything to do with those fees.

      We think all this makes the Commissioner’s reading the better one. It’s

consistent with the ordinary public meaning of the term, consistent with his own

construction of a similar clause in section 1402, and consistent with other federal

statutes’ and regulations’ definitions of compensation on a fee basis. We therefore

hold that for Judge Jones to take his deductions above the line he must show that

he received fees directly from the public in exchange for services that he rendered.
                                         - 16 -

       We find that he can’t do this. He doesn’t retain fees collected by his court

as compensation for his services. His salary is paid from the county’s general

fund--that salary may be funded in part by fees, but these fees aren’t paid in

exchange for services that Judge Jones renders himself and Judge Jones isn’t paid

them directly.

III.   Judge Jones’s Compensation

       Judge Jones also argues that even if the phrase “fee basis” means that his

compensation must come directly from the public he serves, he is still a fee basis

official for two reasons: first, because the court automatically remits a portion of

the fees paid by the public not just to its general fund but directly to the judges’

retirement plan, and second because judges in Maricopa County are allowed to

collect fees for performing wedding ceremonies.

       While it’s true that a portion of the fees that the superior court collects is

automatically remitted to the Elected Officials’ Retirement Plan, in which Judge

Jones and other superior court judges participate, those fees aren’t paid directly to

him by the public, and aren’t distributed to him until several years later. In fact,

during the tax years at issue, Judge Jones didn’t receive any compensation from

his retirement plan as he hadn’t yet retired. We therefore also hold that Judge

Jones wasn’t compensated on a fee basis via his retirement plan.
                                        - 17 -

      The argument about fees from weddings is a bit different. It’s true that

superior court judges in Maricopa County are entitled to receive fees directly from

the public for performing wedding ceremonies. Collecting fees is discretionary,

however, and Judge Jones admitted during trial that he waived fees for weddings

he performed during the tax years at issue. If we read section 62 as telling us to

look at Judge Jones’s individual circumstances and ask if his individual position

was compensated even “in part on a fee basis,” we would have to answer “no”.

      But he makes a subtler argument--that section 62(a)(2)(C) tells us not to

focus on the particulars of his situation but to step back and look at whether his

type of position--i.e., superior court judge--is one “compensated in whole or in

part on a fee basis.” Just because he himself wasn’t compensated on a fee basis

doesn’t mean that he wasn’t in a position that was “compensated in whole or in

part on a fee basis.” If any superior court judge was taking a fee for even a single

wedding, wouldn’t that make the position of superior court judge one compensated

at least in part on a fee basis?

      This isn’t a bad question. But let’s take another look at section 62(a)(2)(C).

It allows as a deduction from gross income in computing AGI

      [t]he deductions allowed by section 162 which consist of expenses
      paid or incurred with respect to services performed by an official as
                                       - 18 -

      an employee of a State or a political subdivision thereof in a position
      compensated in whole or in part on a fee basis.

      And now consider this hypothetical: A Maricopa County Superior Court

judge gets a call to perform a wedding in the far reaches of Arizona. The fee is

$200, but he has to pay $120 for a motel, another $20 for gas and $10 for tolls.

These are expenses that he incurs to produce fee income that goes directly to him.

Should he report $200 in extra income and practically speaking (because of the

2% limit) get no useful deduction for the $150 in expenses that he incurred to

make the $200 in fee income? Maybe the right way to read section 62(a)(2)(C) is

that it allows a segregation of expenses for public officials compensated in part on

a fee basis--allowing them to deduct above the line those expenses incurred to

produce fee income, but treating them like all other employees when it comes to

any other employee business expenses.

      This might be a reasonable reading. It might even be the most reasonable

reading of that section. But it’s not one we have to make today in light of Judge

Jones’s honest admission that he married people for free during the years at issue

here. We think that the possibility that one of his colleagues was more mercenary

than he at weddings can’t convert his own position into one “compensated in
                                          - 19 -

whole or in part on a fee basis” any more than the collection of even one filing fee

by the clerk of his court would.

         Section 62(a)(2)(C) tells us to look at the particular situation of individual

taxpayers. Is he “an official?” Is he “an employee of a State * * * in a position

compensated in whole or in part on a fee basis?” Singular terms in the Code can

include their plural form unless “the context indicates otherwise.” See

Commissioner v. Driscoll, 669 F.3d 1309, 1311 (11th Cir. 2012) (quoting United

States v. Hayes, 555 U.S. 415, 422 n.5 (2009)), rev’g and remanding 135 T.C. 557

(2010). But, as in Driscoll, we think “a” and “an” are function words used before

singular nouns and indicate a singular meaning here. See id. at 1312.

         No portion of Judge Jones’s compensation for his role as a public officer

was provided on a fee basis. Rather, he was an employee of the State of Arizona

and paid a salary for his work. Thus, his expenses are deductible as unreimbursed

employee expenses under section 162 and should be reported as miscellaneous

itemized deductions subject to a 2% floor. We hold for the Commissioner on this

issue.

IV.      Accuracy-Related Penalties

         The only other issue for decision in this case is whether Judge Jones is

liable for accuracy-related penalties for the 2008, 2009, and 2010 tax years under
                                        - 20 -

section 6662. Under section 6662(b)(2), a penalty is appropriate when an

underpayment of tax is attributable to “[a]ny substantial understatement of income

tax.” An understatement of tax is “substantial” if it exceeds the greater of $5,000

or “10 percent of the tax required to be shown on the return.” Sec. 6662(d)(1)(A).

The Commissioner satisfies his burden of production because Judge Jones’s

understatement of tax exceeds $5,000 (and 10% of the tax required to be shown on

the return for each tax year at issue). See sec. 6662(b)(2).8

      Judge Jones can avoid the penalties by showing evidence that his mistake

was reasonable and in good faith. See sec. 6664(c)(1); sec. 1.6664-4(a), Income

Tax Regs. In making our decision, we examine all the relevant facts and

circumstances, including his efforts to determine his proper tax liability and

whether he relied in good faith on professional advice. See sec. 1.6664-4(a),

Income Tax Regs. Reliance on a preparer excuses a taxpayer from an accuracy-

related penalty only if his reliance was reasonable. Neonatology Assocs., P.A. v.

Commissioner, 115 T.C. 43, 99 (2000), aff’d, 299 F.3d 221 (3d Cir. 2002).

Reliance is reasonable if:




      8
          Section 6662 penalties are also appropriate where an underpayment of tax
is attributable to a taxpayer’s “[n]egligence or disregard of rules or regulations,”
and the Commissioner asserts both arguments. Sec. 6662(b)(1).
                                       - 21 -

      •      the adviser was a competent professional with sufficient
             expertise to justify reliance;

      •      he provided necessary and accurate information to the
             adviser; and

      •      he actually relied on the adviser’s judgment in good faith. Id.

      We find Judge Jones’s testimony as to his CPAs’ expertise credible.

Though neither CPA testified9 as to his education, Judge Jones testified that each

had several years of experience and came highly recommended by other members

of the court. We are satisfied that Judge Jones provided all of the relevant

paperwork to his CPAs--he even discussed each individual deduction with them.

      We find that Judge Jones reasonably relied on professional advice. Even

without a CPA to back him up, we have no doubt about Judge Jones’s good faith

in taking the position that he did. We also find that the position he took was quite

reasonable in the absence of any case law or regulation. This is one of those Code

sections that has some ambiguity in it and that no court has ever looked at before




      9
        We note that one of the two CPAs Judge Jones relied on to prepare his
return had died before trial.
                                        - 22 -

in any depth. Though in the end we agree with the Commissioner, we see no

justification for penalties. We find for Judge Jones on this issue.


                                                      Decision will be entered under

                                                 Rule 155.
