- 32 -
hand, it is “not always * * * true” that trial courts “[act] on a
soundly reasoned basis in every tax case.” Huckaby v. U.S. Dept.
of Treasury, 804 F.2d 297, 299 (5th Cir. 1986); see also Henry v.
Commissioner, 34 Fed. Appx. 342, 345 (9th Cir. 2002) (Court of
Appeals had previously “found clear error in the Tax Court’s
findings” on negligence issue, which “leads to the conclusion
that the Commissioner’s position was not substantially
justified”).
As noted above, respondent took the position in Dixon III
that the acknowledged attorney misconduct amounted to harmless
error, and this Court agreed. While we would like to think that
we “[acted] on a soundly reasoned basis” in adopting respondent’s
position, the Court of Appeals in Dixon V could not have been
more clear in expressing and emphasizing its view that our
holding in Dixon III did not have a reasonable basis in law. The
Court of Appeals began by stating: “We review the Tax Court’s
refusal to grant a motion vacating a judgment on the basis of
fraud on the court for abuse of discretion, mindful that only
when this Court has a ‘definite and firm conviction that the Tax
Court committed a clear error of judgment in the conclusion it
reached’ is reversal appropriate.” Dixon v. Commissioner, 316
F.3d 1041, 1046 (9th Cir. 2003) (citations omitted). The Court
of Appeals quickly concluded: “Because the Tax Court applied the
wrong legal standard, it abused its discretion.” Id.
Specifically, “[t]he Tax Court * * * applied the wrong law when
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011