- 8 - As noted above, respondent decided to rely exclusively on the accounting method theory 2 weeks prior to the trial of the instant case, after petitioners had complied with respondent's discovery requests and respondent had rejected petitioners' offers to settle the case.4 Although respondent claims that the change constituted a "narrowing" of theories that resulted from development of the facts through discovery during the course of the Tax Court proceeding, respondent does not set forth any specific facts that prompted the change when respondent became aware of them, and petitioners contend that no facts were developed that would form the basis of a new position. Petitioners allege, and respondent does not deny, that the theory respondent ultimately advanced at trial was adopted shortly after it was suggested to respondent's counsel by "IRS experts in Washington". Petitioners also allege, and respondent does not deny, that, on the day when respondent informed petitioners' counsel that respondent would rely on the accounting method theory, respondent's counsel acknowledged that her research on it was 4 Respondent indicates that the case was not settled because certain facts crucial to petitioners' claims were only established by petitioner's testimony at trial and that petitioners' ability to establish those facts turned on petitioner's credibility. Respondent has not suggested that the information contained in petitioner's testimony was not available prior to the trial. Moreover, respondent's abandonment 2 weeks prior to trial of the contention that the payment in issue was not a guaranteed payment suggests that respondent believed that petitioners would be able to establish that claim.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011