Dartmouth Clubs, Inc. - Page 11
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litigation costs, refers to the position of the United States in
a judicial proceeding. See sec. 7430(c)(7)(A). Respondent's
position in the proceeding before this Court was established on
September 28, 1998, the date respondent filed his answer. See
Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992),
affg. in part and revg. in part T.C. Memo. 1991-144.
Although ordinarily the reasonableness of each of those
positions is considered separately to allow respondent to change
his position, Huffman v. Commissioner, supra at 1144-1147, it
appears in this case that respondent took the same position in
both the notice of deficiency and the answer. More specifically,
respondent's position was that petitioner failed to substantiate
the deductions for cash payments that it claimed on its returns.
Petitioner contends that it provided the required
substantiation at the administrative review in May 1997, that the
case should have concluded at that point, and that the "Notice of
Deficiency constituted nothing but harassment".
The record does not support petitioner's contention. At
respondent's request in June 1999, petitioner promised to provide
worksheets reconciling the Forms 1099 to the corporate records;
however, petitioner required 2 months to prepare the worksheets.
Therefore, it is apparent that the worksheets did not exist at
the time of the May 1997 conference, and that petitioner did not
provide respondent information sufficient to substantiate its
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