Phuong K. Nguyen - Page 16




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          so.  Such failure led respondent to take a position in the notice           
          of deficiency that was not supported by information already in              
          respondent’s possession.  In other words, respondent’s position             
          in the notice of deficiency was contrary to fact and law and                
          therefore not substantially justified within the meaning of                 
          section 7430(c)(4)(B).  See Pierce v. Underwood, 287 U.S. 552               
          (1988).                                                                     
               Respondent relies on Harrison v. Commissioner, 854 F.2d 263            
          (7th Cir. 1988), affg. T.C. Memo. 1987-52, for the proposition              
          that the Commissioner should not be liable for a taxpayer’s costs           
          for the period of time that it may reasonably take to review                
          documentation submitted by the taxpayer.  However, that case is             
          clearly distinguishable.  There, the Commissioner issued a notice           
          of deficiency before the examination was completed in order to              
          toll the running of the period of limitations.  Because the                 
          Commissioner had not received the taxpayers’ consent to extend              
          the period of limitations, the Court of Appeals concluded that              
          the issuance of the notice was reasonable, notwithstanding the              
          fact that the Commissioner ultimately conceded the case.                    
               In the present case, the statute of limitations was of no              
          legitimate concern to respondent at the time that the notice of             



               5(...continued)                                                        
          of limitations were imminent.  However, in the present case, the            
          year under examination was 1998; accordingly, the statute of                
          limitations on assessment was of no legitimate concern to                   
          respondent in July 1999.  See sec. 6501(a).                                 




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