Lucian T. Baldwin, III - Page 43

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          as to harm the Commissioner.  Because the duty of consistency is            
          an affirmative defense, respondent bears the burden of proving              
          that it applies.  Rule 142(a).                                              
               From 1988 until approximately 1 month before trial,                    
          petitioner consistently represented to respondent that BAC was an           
          S corporation.  Petitioner initially caused Form 2553, Election             
          by a Small Business Corporation, which indicated that Mrs.                  
          Baldwin was BAC’s sole shareholder and that she had the authority           
          to elect S corporation status for BAC, to be filed on behalf of             
          BAC.  Petitioner also caused BAC to file Forms 1120S, U.S. Income           
          Tax Return for an S Corporation, and deducted BAC’s passthrough             
          losses on his Forms 1040, U.S. Individual Income Tax Return, for            
          the years at issue.  Petitioner did not inform respondent during            
          the audit that the validity of BAC’s S corporation election was             
          an issue.  Petitioner also represented, under oath, in formal               
          discovery proceedings in this case that BAC was an S corporation.           
          Petitioner now seeks to repudiate BAC’s S corporation status, in            
          an effort to deprive this Court of jurisdiction over the BAC                
          issues and respondent of the opportunity to obtain a ruling on              
          the BAC issues raised in this case.                                         
               Petitioner argues that the duty of consistency does not                
          apply because respondent has failed to prove that respondent                
          reasonably relied upon BAC’s S election when issuing the notices            

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