Foothill Ranch Company Partnership, Buck Equities, Ltd., Tax Matters Partner - Page 6

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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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