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[taxpayers] to anticipate litigation concerning those
deductions." Id. From that premise we held that the documents
in question in Bernardo were prepared in anticipation of
litigation and protected by the work product doctrine.
By way of analogy, in cases where grand jury information was
being used by the Government in connection with a related civil
matter, it was required, among other things, that the disclosure
of grand jury information be "preliminarily to or in connection
with a judicial proceeding". Fed. R. Crim. P. 6(e)(3)(C)(i).
That concept is substantially similar to "anticipation of
litigation". We consider the following Supreme Court explanation
of "preliminarily to or in connection with a judicial proceeding"
as helpful to our analysis here:
the Rule contemplates only uses related fairly directly
to some identifiable litigation, pending or
anticipated. Thus, it is not enough to show that some
litigation may emerge from the matter in which the
material is to be used, or even that litigation is
factually likely to emerge. * * *
It follows that disclosure is not appropriate for
use in an IRS audit or civil tax liability, because the
purpose of the audit is not to prepare for or conduct
litigation, but to assess the amount of tax liability
through administrative channels. * * * [United States
v. Baggot, 463 U.S. 476, 480 (1983); fn. ref. omitted.]
See also Kluger v. Commissioner, 83 T.C. 309, 326-327 (1984).
We accept the general concept that, normally, the audit or
examination process is not conducted in anticipation of
litigation. If a particular matter has been singled out for
litigation and Government lawyers become involved to begin
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