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disagree. Inconsistent positions were not appropriate here.
There was no doubt about the facts, and the State law was clear
that the payment to petitioner in 1992 was in the nature of a
property settlement and not alimony.
In sum, we find that respondent failed to carry the burden
in establishing that the position taken during the administrative
proceeding was substantially justified.
Judicial Proceeding
We now examine whether respondent's position in the judicial
proceeding was substantially justified. The position taken in
respondent's answer was the same as in the notice of deficiency;
i.e., respondent claimed that the $750,000 payment was includable
in petitioner's income for 1992. As stated above, respondent was
in possession of information which established that this position
was erroneous over a year before the answer was filed.
Respondent argues, however, that new information was
received after the time the answer was filed (January 13, 1997).
Respondent claims that the legal memorandum received from Beeler
on September 22, 1995, did not disclose that the payment was made
by the clerk of the Superior Court pursuant to a property
condemnation order and not by Human directly. Respondent claims
that it was not until August 20, 1997, that he knew the clerk and
not Human had made the payment. This, respondent asserts, formed
the basis for filing a notice of no objection to petitioner's
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