- 24 -
had claimed or to evaluate his ability to prove that petitioner
had actual knowledge of the factual circumstances that caused the
disallowance of the Hoyt partnership items before taking his
position in this case. Respondent should have meaningfully
evaluated whether he could prove that petitioner had actual
knowledge by taking into account the information supplied by
petitioner, 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. Owen had invested. The record does not
indicate that respondent considered any of the information that
was available to him in September 2002 before adopting his
administrative position. Respondent’s failure to properly apply
the actual knowledge standard in the context of the information
he had acquired regarding Mr. Hoyt and the Hoyt organization in
this case cannot be rationalized. Respondent’s lack of diligence
in evaluating his ability to prove actual knowledge, therefore,
was not justified. See Stieha v. Commissioner, 89 T.C. 784, 791
(1987) (Commissioner’s lack of diligence in evaluating the impact
of recent court opinions not substantially justified).
Third, the record discloses no meaningful effort by
respondent to properly analyze section 6015(c) with respect to
the position, as determined by respondent, that petitioner and
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011