Windsor Production Corporation - Page 14

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              e.    Whether Respondent's Desire to Have a Trial Bars an               
                    Award of Litigation Fees                                          
              Respondent contends that trial was needed so respondent                 
          could assess the probative value, admissibility of testimony and            
          documents offered by petitioner to prove its business needs.                
          For example, respondent wanted to assess Arnold Saltzman's                  
          credibility at trial.  Respondent argues that until respondent              
          conceded the accumulated earnings tax issues, respondent's                  
          litigating position was substantially justified because this case           
          could only be resolved by examining the facts and circumstances,            
          including assessing the credibility of the witnesses.  We                   
          disagree.  The Government is not automatically excused from                 
          having a reasonable basis in fact in cases where facts and                  
          witnesses' credibility are in dispute.                                      
              Respondent cites Richman v. Commissioner, T.C. Memo. 1994-              
          140 for the proposition that respondent's position is                       
          substantially justified where the issues are factual and depend             
          on a determination of credibility.  This is not what we held                
          in Richman.  In Richman, the Commissioner determined that the               
          taxpayer fraudulently omitted interest income.  We held that                
          the Commissioner had a reasonable basis in fact because, when               
          respondent issued the notice of deficiency, respondent knew that            
          the taxpayer used an incorrect Social Security number on his                
          account statements, and the account statements contained a notice           






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