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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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