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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. The following
colloquy transpired at trial between Sadanaga and counsel for
respondent:
Q [Counsel for respondent] Are you aware of the
case of Texas Carbonate versus Phinney?
A [Sadanaga] No.
Q Have you ever discussed that case with anyone?
A Yes.
Q Who did you discuss the case with?
A It was just mentioned to me by my accountant.
Q Could you clarify “just mentioned to you”?
A He had mentioned it as incorporating it as
evidence within this.
Q And that was today that you discussed it?
A No.
Q When did you discuss the case?
A Two or three months ago.
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