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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 after 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, Ridge appeared but
presented no evidence regarding petitioner’s rationale for the
nonemployee treatment. Nor would testimony by Grey, the
accountant who advised petitioner and prepared petitioner’s tax
returns, have provided any further justification. See Veterinary
Surgical Consultants, P.C. v. Commissioner, T.C. Memo. 2003-48
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