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2. Reasonableness of Respondent’s Position
Respondent contends that the Appeals Office’s position in
the notice of determination was substantially justified because
the information available to the Appeals officer at the time led
her to believe that petitioner had actual knowledge and because
no allocation of the Hoyt partnership items could be made given
petitioner’s contention that all of the items were attributable
to Mr. Foy. Respondent also contends that the position of the
Appeals Office was reasonable because the Appeals officer had no
information available from which she could determine whether any
disqualified assets within the meaning of section 6015(c)(4) had
been transferred to petitioner and whether any assets had been
transferred between petitioner and Mr. Foy as part of a
fraudulent scheme. Sec. 6015(c)(3)(A)(ii).
Respondent further argues that, as of the date of his
answer, “The information then available to respondent showed that
petitioner had knowledge of and had been involved with the Hoyt
organization to some degree.” Respondent also argues that “At
the time this case was answered, the deficiencies in issue could
not be allocated between petitioner and her former spouse under
section 6015(d) because the parties disagreed about whether and
to what extent the investment in SGE 1984-3 was attributable to
petitioner.” Respondent maintains that it was impossible to
determine with certainty whether petitioner had actual knowledge
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