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in May 2004, relating to the 2002 taxable year, were useful but
not sufficient to invalidate respondent’s position as to the 2003
taxable year. Each taxable year stands on its own and must be
separately considered. See United States v. Skelly Oil Co., 394
U.S. 678 (1969).
Respondent’s position was substantially justified until
December 9, 2004, when petitioner provided respondent with
relevant information related to the 2003 taxable year. The
Commissioner has a reasonable period to analyze submitted
documentation and modify his position accordingly. Sokol v.
Commissioner, supra at 765-766. We note that respondent promptly
settled all issues related to the 2003 taxable year after
petitioner’s claims were substantiated.
We conclude that respondent’s position was substantially
justified under section 7430(c)(4)(B). Respondent was unaware
that his position was invalid because he had yet to receive
sufficient information necessary to make an appropriate
determination as to petitioner’s 2003 taxable year. Moreover,
the parties did not reach a final settlement regarding
petitioner’s 2002 taxable year until more than 3 months after the
2003 notice of deficiency was issued.
We also note that in his motion petitioner has apparently
intermingled services which were rendered for both the 2002 and
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