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Q Is that based on a review of the returns
themselves?
A Exactly. That's all I had was just the--
I believe it was the 1993 return that the audit
began with.
Q That's the only return you had looked at
that time?
A Yes. I believe that is correct. It
was 1993 or 1992. 1994 had not been filed. I
believe I began with the 1993 return. It's in
the record if it needs to be verified.
Respondent's position is that the exception for
adequate disclosure provided in section 6662(d)(2)(B)(ii)
does not apply and "the penalty should be sustained in full
for each of the years 1989 through 1994." Respondent asks
the Court to reject petitioner's argument that the personal
holding company issue is apparent from the face of the
returns for 1989 through 1993. Respondent does not provide
an analysis of the face of the returns but argues that the
ability of respondent's agent to immediately spot the
personal holding company tax issue does not mean that the
issue was adequately disclosed on the returns, within the
meaning of section 6662(d)(2)(B)(ii). Respondent does not
address the disclosure made in petitioner's 1994 return.
Respondent also argues:
Even if the Court were to conclude that the
relevant facts affecting the item's tax treatment
were adequately disclosed in the returns, no
evidence has been offered that the petitioner had
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