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the recovery of litigation costs. See Bertolino v. Commissioner,
930 F.2d 759, 761 (9th Cir. 1991); Sher v. Commissioner, 861 F.2d
131, 134-135 (5th Cir. 1988), affg. 89 T.C. 79 (1987).
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
case, however, we jointly consider the positions because there is
no indication that respondent’s position changed between the
issuance of the notice of deficiency (on January 30, 1998) and
the filing of the answer to the petition (on May 22, 1998). See
Swanson v. Commissioner, 106 T.C. 76, 87 (1996).
C. Reasonable Basis in Law and Fact
Taxpayers are required to maintain books and records in
accordance with rules and regulations prescribed by the
Secretary. See sec. 6001. Generally, taxpayers must “keep such
permanent books of account or records” sufficient to establish
gross income, deductions, or other matters required to be shown
on the return. Sec. 1.6001-1(a), Income Tax Regs. Accounting
records include the taxpayer’s regular books and other records
and data necessary to support entries on books and tax returns.
See sec. 1.446-1(a)(4), Income Tax Regs.
Taxable income is generally computed under the method of
accounting on the basis of which the taxpayer regularly computes
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