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Commissioner, 939 F.2d 874, 881 (9th Cir. 1991), affg. in part
and revg. in part T.C. Memo. 1989-390. The justification for
each of respondent's positions must be independently determined.
See, e.g., Powers v. Commissioner, 51 F.3d 34, 35 (5th Cir.
1995); Swanson v. Commissioner, 106 T.C. 76, 92, 97 (1996).
During the course of this proceeding, respondent contended:
(1) The petition was defective because it did not designate the
proper tax matters partner; (2) the period of limitations on
assessment had not expired; and (3) petitioner was not entitled
to use PCM to report its income. Petitioner does not challenge
respondent's position relating to the tax matters partner and
period of limitations issues. As a result, petitioner is not
entitled to fees relating to those issues. Petitioner contends,
however, that respondent's position, regarding the PCM issue, was
not substantially justified.
Section 460(a) requires taxpayers to use PCM to report
income from any long-term contract. A long-term contract is "any
contract for the manufacture, building, installation, or
construction of property if such contract is not completed within
the taxable year in which such contract is entered into." Sec.
460(f)(1). Notice 89-15, 1989-1 C.B. 634, provides additional
guidance regarding the definition of a long-term contract. The
notice provides, in pertinent part, that a long-term contract
includes "any contract for the production or installation of real
property or any improvements to real property", if the contract
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