Donald C. Richardson and Rita M. Allaire - Page 24

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          Harrison v. Commissioner, 854 F.2d 263 (7th Cir. 1988), affg.               
          T.C. Memo. 1987-52.                                                         
               Petitioners and PCCL also contend that the notices of                  
          deficiency were based on respondent's sole reliance on a "bad               
          whistle blower", and, therefore, respondent was not substantially           
          justified in issuing the notices.  Petitioners contend that they            
          notified respondent of Paige's lack of credibility and                      
          questionable motives for making allegations against petitioners             
          and PCCL in August 1995.  Petitioners claim that respondent was             
          therefore notified at an early stage of the investigation and,              
          essentially, should not have continued the investigation.                   
               Petitioners' letter was dated August 19, 1996, not 1995 as             
          petitioners contend.  Respondent was provided information which             
          asserted that Paige lacked credibility a year and 10 months after           
          the investigation had begun.  Respondent's determinations were              
          not based solely on Paige's allegations.  Paige also submitted              
          substantial documentation to respondent, along with a list of               
          witnesses.  Paige's allegations may have triggered an examination           
          of the 1993 and previous years tax returns; however, it was the             
          subsequent examination and criminal investigation that provided             
          information that caused respondent to issue the notices of                  
               There is no indication in the record that respondent                   
          undertook a position that was not substantially justified.  For             

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