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assess tax by signing Forms 872-A; (2) before asking the taxpayer
to consent to extending the limitations period, the Commissioner
had already decided to let the statute of limitations bar
assessment of tax against the taxpayer if the taxpayer did not
consent; (3) the Commissioner had also decided not to contact the
taxpayer or examine the taxpayer’s books and records; and (4) the
Commissioner’s counsel had prior familiarity with the taxpayer’s
tax returns for the years at issue which should have led him to
doubt that Commissioner’s position would prevail. Powers v.
Commissioner, 100 T.C. at 473-474.
Powers is distinguishable from the instant case because here
respondent did contact petitioners and attempt to obtain
information from them about the case.
The instant case comes close to being a borderline
situation. Respondent could and should have served the IDR or
otherwise started the process of requesting substantiation at the
April 23, 1996, meeting between Ward and petitioners’
representative. Instead, Ward withheld the already-prepared IDR
and did not otherwise ask for any substantiation at this meeting.
Although the matter is not free from doubt, we conclude that it
is more likely than not that respondent’s fixation with obtaining
the second extension, after having frittered away the bulk of the
extension that petitioners already had granted, was the primary
cause of the position respondent took in the answer. At the time
of the answer, respondent did not have the substantiation because
respondent had decided not to ask for the substantiation. Thus,
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