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For purposes of petitioners' motion, respondent took a
position in the administrative proceeding when the statutory
notice of deficiency was issued to petitioners on March 11, 1993,
sec. 7430(c)(7)(B), and in the court proceeding when the answer
to the petition was filed on July 26, 1993, Huffman v.
Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992), affg. in part,
revg. in part and remanding T.C. Memo. 1991-144. Although
ordinarily the reasonableness of each of those positions is
considered separately to allow respondent to change her position,
id. at 1144-1147, it appears that respondent took the same
position in both the notice and the answer. In the instant case,
respondent determined that the payment in question, which
petitioner received from the partnership during 1987, was taxable
in that year. In the answer, respondent denied petitioners'
allegations that the payment represented a guaranteed payment
that was taxable to petitioner in the years when the payment was
accrued by the partnership pursuant to section 707(c) and the
regulations thereunder.
At those times, respondent argued that the payment in
question was a payment governed by section 707(a) that was
taxable when received, and that the duty of consistency barred
petitioners from contending that the payment was taxable in
closed years. Petitioners contend that those positions were not
substantially justified based on the facts in the record and the
applicable law. Those arguments were abandoned by respondent 2
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