- 6 -
861 F.2d 131 (5th Cir. 1988). Furthermore, it is generally
considered "reasonable" for the Commissioner to require a
taxpayer to substantiate income and deductions, and the
Commissioner typically will not be held liable for costs under
section 7430 for taking a position that requires a taxpayer to
show that such requirements have been met. See Amann v.
Commissioner, T.C. Memo. 1993-542, affd. without published
opinion 40 F.3d 1235 (1st Cir. 1994); Chiaffarano v.
Commissioner, T.C. Memo. 1992-614.
The Parties' Contentions
Petitioner sets forth various arguments in support of the
contention that respondent's position was not substantially
justified. The gravamens of petitioner's contention are: (1)
Respondent conceded the majority of the deficiencies; (2)
respondent failed to employ certain "standard auditing
procedures" that would have enabled respondent to easily
ascertain the correct amount of the taxable income; and (3)
petitioner offered to settle the case prior to the issuance of
the notice of deficiency for roughly the same amount as
ultimately stipulated.
Respondent's primary contention is that petitioner's books
and records were inadequate, and, as a result, respondent's
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