- 11 -
(1997) (quoting Pierce v. Underwood, supra at 566 n.2). The fact
that the Commissioner eventually loses does not establish that
his position was unreasonable. Estate of Perry v. Commissioner,
931 F.2d 1044, 1046 (5th Cir. 1991).
The relevant inquiry is “whether * * * [the Commissioner]
knew or should have known that * * * [his] position was invalid
at the onset”. Nalle v. Commissioner, 55 F.3d 189, 191 (5th Cir.
1995), affg. T.C. Memo. 1994-182. Generally, the Commissioner’s
position is considered substantially justified when an issue is
one of first impression. See TKB Intl. Inc. v. United States,
995 F.2d 1460, 1468 (9th Cir. 1993); Estate of Wall v.
Commissioner, 102 T.C. 391, 394 (1994).
Relying on our decision in Zinniel v. Commissioner, 89 T.C.
357 (1987), petitioner contends that respondent’s position cannot
be considered substantially justified because section 475(g)
commands the Secretary to issue regulations for implementing the
mark-to-market election under section 475(f) and therefore Rev.
Proc. 99-17, 1999-1 C.B. 503, is invalid. Regarding Rev. Proc.
99-17, supra, we note that respondent can reasonably rely upon a
revenue procedure until it is revoked or held invalid. Cf.
Rauenhorst v. Commissioner, 119 T.C. 157, 170 (2002) (holding
that the Commissioner is bound to follow revenue rulings and we
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