- 10 - of deficiency. See sec. 7430(c)(7)(B). The position of the United States that must be examined against the substantial justification standard with respect to the recovery of litigation costs is the position taken by the Commissioner in the answer to the petition. See Bertolino v. Commissioner, 930 F.2d 759, 761 (9th Cir. 1991); Sher v. Commissioner, supra at 134-135. Ordinarily, we consider the reasonableness of each of these positions separately. See Huffman v. Commissioner, 978 F.2d 1139, 1144-1147 (9th Cir. 1992), affg. in part, revg. in part and remanding on other issues T.C. Memo. 1991-144. In the present cases, however, we need not consider two separate positions because there is no indication that respondent's position changed or that respondent became aware of any additional facts that rendered his position any more or less justified between the issuance of the notices of deficiency and the filing of the answers to the petitions. We now turn to petitioners' contention that respondent's position was not substantially justified. In order to decide whether respondent's position was substantially justified we must review the substantive merits of these cases. Respondent determined that IC's cash/hybrid method of accounting did not clearly reflect its income because merchandise was an income-producing factor in IC's business and, therefore, that the use of inventories was necessary to clearly determinePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
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