- 14 - of section 701 of Pub.L. 104-168, 110 Stat. 1452, 1463 (1996), Taxpayer Bill of Rights 2.) Respondent contends: the Commissioner’s position was substantially justified. In particular, respondent contends: (1) It was reasonable to take the position that petitioners “did not have a valid matrimonial agreement under Louisiana law”; (2) it was reasonable “to take whipsaw or inconsistent positions to protect the revenue”; and (3) it was reasonable to charge Sandra (as well as Michael) with civil tax fraud. Sandra contends that “Respondent had no reasonable basis in fact or law to conclude [(1)] that the Marital Agreement did not exist, was invalid, or was not timely filed in St. Tammany Parish”; (2) that Louisiana law required a second filing; (3) that a 1991 Jefferson Parish filing would not satisfy any second filing requirement that there might be under Louisiana law; and (4) “that any fraud penalty existed on Petitioner’s [Sandra’s] tax return for either year in question.” The justification for each of respondent’s positions must be separately determined. Foothill Ranch Co. Partnership v. Commissioner, 110 T.C. 94, 97 (1998). We agree with respondent as to income-splitting. We agree with Sandra as to civil fraud penalties, to the extent they exceeded negligence penalties.Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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