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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 shortly 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. The following colloquy
transpired at trial between Murdock and counsel for respondent:
Q [Counsel for respondent] Mr. Murdock are you
familiar with a case, Texas Carbonate versus Phinney?
A [Murdock] No, I’m not.
Q No one ever discussed that case with you?
A No.
Petitioner proposed to call Grey, the accountant who advised
petitioner and prepared petitioner’s tax returns. Grey was not
allowed to testify in this case because he had not been listed as
a witness in petitioner’s trial memorandum, in violation of this
Court’s Standing Pre-Trial Order. See Rule 131(b). His
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