Nu-look Design, Inc. - Page 18




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          (reversing and remanding because it was “unclear from the record            
          whether * * * [the taxpayer] in fact relied on any specific                 
          industry practice in reaching its decision to treat its * * *               
          [workers] as non-employee tenants, let alone whether such                   
          reliance was reasonable”); Select Rehab, Inc. v. United States,             
          205 F. Supp. 2d 376, 380 (M.D. Pa. 2002) (“The taxpayer must show           
          that it relied upon those grounds [alleged as a reasonable                  
          basis], and that the reliance was reasonable.”); W. Va. Pers.               
          Servs., Inc. v. United States, 78 AFTR 2d 96-6600, at 96-6608,              
          96-2 USTC par. 50,554, at 85,919 (S.D. W. Va. 1996) (“The plain             
          meaning of section 530(a)(2) is that only evidence known to and             
          relied upon by the taxpayer is relevant.  Facts that are learned            
          after the incorrect treatment of the employees * * * are not                
          facts that a taxpayer relied upon in making its original decision           
          regarding how to treat its employees.”).                                    
               Until a few months before trial, petitioner did not purport            
          to rely on Section 530 or the bases described therein and                   
          expressly disclaimed any dependence on the statute.  Petitioner’s           
          present claim of reliance is not credible.  At trial, Stark                 
          testified as a witness but presented no evidence that he was                
          aware of Tex. Carbonate Co. v. Phinney, supra, or that anyone had           
          ever discussed the case with him.                                           
               Petitioner proposed to call Grey, the accountant who advised           
          petitioner and prepared petitioner’s tax returns.  Grey was not             






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