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for 2 of the 5 tax years; and (4) petitioner did not set up
formal reserve accounts. See Solomon v. Commissioner, 732 F.2d
1459, 1461 (6th Cir. 1984)(stating badges of fraud include
failure to report income over an extended period of time), affg.
T.C. Memo. 1982-603; Wright v. Commissioner, 84 T.C. 636, 643-644
(1985)(stating taxpayer’s conviction, pursuant to section
7206(1), is a factor to be considered in determining fraud).
Although respondent had a reasonable basis for his position, he
simply did not establish that petitioner had the requisite intent
to evade tax. Thus, notwithstanding the shortcomings of
respondent’s case at trial, respondent’s position was
substantially justified. Accordingly, petitioner is not entitled
to an award of litigation costs pursuant to section 7430.
Contentions we have not addressed are irrelevant, moot, or
meritless.
To reflect the foregoing,
An appropriate order will be
issued denying petitioner’s motion,
and decisions will be entered for
petitioner.
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Last modified: May 25, 2011