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affidavit filed herein that the "issue [of the expenses] was not
critical to the [State court] trial".
The jury verdict states that petitioner performed what it
was required to do under the contracts; the verdict does not
state that everything petitioner did was required by those
contracts. Moreover, Mike himself testified that he bought the
cars due to the substantial business relationship of the parties
and because Ohanesian asked for them, not because he was required
to do so. Thus, respondent's administrative and litigation
position disputing the deductibility of these expenses under
section 162 did not rely on evidence that was scant or unworthy
of belief. See VanderPol v. Commissioner, 91 T.C. 367, 370
(1988). To the contrary, it was justified by legal precedent and
based upon the Gehans' prior affidavits and testimony. See Nalle
v. Commissioner, 55 F.3d at 191-192; Coastal Petroleum Refiners,
Inc. v. Commissioner, 94 T.C. at 688.
Furthermore, petitioner has not shown that respondent was
not substantially justified in refusing to concede the case with
petitioner until the Ohanesians conceded with respect to the
Ohanesian-related items. Respondent was caught in a potential
"whipsaw" position. A whipsaw occurs when different taxpayers
treat the same transaction involving the same items
inconsistently, thus creating the possibility that income could
go untaxed, or two unrelated parties could deduct the same
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