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Petitioner also called Grey, the accountant who advised
petitioner and prepared petitioner’s tax returns. Grey was
permitted to testify in this case, despite petitioner’s failure
to list him as a witness in its trial memorandum, in the interest
of a complete record and because respondent had been given
sufficient warning and time to prepare.
Grey explained that he had based his determination that
Sadanaga was not an employee on common law concepts pertaining to
the employment relationship, particularly the element of control.
As regards Section 530 and judicial precedent, Grey testified
that he was unaware of the Tex. Carbonate Co. v. Phinney, supra,
case until posttrial briefing, during the fall of 2001, in Joseph
M. Grey Pub. Accountant, P.C. v. Commissioner, 119 T.C. 121
(2002). Hence, given the testimony that neither petitioner’s
sole shareholder and officer nor the accountant was familiar with
the alleged judicial authority at the time petitioner decided to
treat Sadanaga as a nonemployee for 1997 and 1998, petitioner has
failed to establish that it relied on judicial precedent or, for
that matter, on any of the other sources specified in Section
530(a)(2)(A). Accordingly, we conclude that subparagraph (A)
does not aid petitioner here.
The same result obtains with respect to subparagraphs (B)
and (C). The parties have stipulated that respondent did not
audit petitioner for employment tax purposes prior to the
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