- 24 - disallowance of the Hoyt partnership items before taking his litigating position in this case. Respondent, who has the burden of proving actual knowledge under section 6015(c)(3)(C), should have meaningfully evaluated whether he could prove that petitioner had actual knowledge by taking into account the information petitioner supplied, the extensive audit and litigating history regarding the Hoyt organization and the Hoyt partnerships, and the specific information regarding the manner in which the Hoyt organization operated the Hoyt partnerships, including the ones in which petitioner and Mr. Bulger had invested. The record does not indicate that respondent considered any of the information that was available to him in April 2003 before adopting his litigating position, other than the fact that petitioner and Mr. Bulger had made a joint investment in SGE. Respondent’s failure to evaluate the information in his possession and its effect on his ability to prove that petitioner had actual knowledge of the items giving rise to the deficiencies cannot be rationalized. We conclude that respondent’s litigating position regarding actual knowledge was not reasonable or justified. See Stieha v. Commissioner, 89 T.C. 784, 791 (1987) (Commissioner’s lack of diligence in evaluating impact of recent court opinions not substantially justified).Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Next
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