Dartmouth Clubs, Inc. - Page 11




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          litigation costs, refers to the position of the United States in            
          a judicial proceeding.  See sec. 7430(c)(7)(A).  Respondent's               
          position in the proceeding before this Court was established on             
          September 28, 1998, the date respondent filed his answer.  See              
          Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992),               
          affg. in part and revg. in part T.C. Memo. 1991-144.                        
               Although ordinarily the reasonableness of each of those                
          positions is considered separately to allow respondent to change            
          his position, Huffman v. Commissioner, supra at 1144-1147, it               
          appears in this case that respondent took the same position in              
          both the notice of deficiency and the answer.  More specifically,           
          respondent's position was that petitioner failed to substantiate            
          the deductions for cash payments that it claimed on its returns.            
               Petitioner contends that it provided the required                      
          substantiation at the administrative review in May 1997, that the           
          case should have concluded at that point, and that the "Notice of           
          Deficiency constituted nothing but harassment".                             
               The record does not support petitioner's contention.  At               
          respondent's request in June 1999, petitioner promised to provide           
          worksheets reconciling the Forms 1099 to the corporate records;             
          however, petitioner required 2 months to prepare the worksheets.            
          Therefore, it is apparent that the worksheets did not exist at              
          the time of the May 1997 conference, and that petitioner did not            
          provide respondent information sufficient to substantiate its               






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