The Internal Revenue Service has lost the first round in a much-anticipated test case against Textron Inc., in which it sought judicial approval for a new program seeking tax accrual workpapers during the examination of corporate clients.The IRS is interested in Textron's and others' workpapers, since they document what the company considers its questionable tax positions.

In 2002, the IRS announced that it was modifying its historic policy of restraint with respect to tax accrual workpapers. The service said that it would, under certain circumstances, seek tax accrual workpapers relating to a taxpayer if the taxpayer has claimed the benefits of a listed transaction on a return.

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