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Commissioner, supra. The term "position of the United States" in
this context, see supra note 2, means the position taken by the
United States in a judicial proceeding. Sec. 7430(c)(7)(A).
Respondent concedes that petitioners substantially prevailed
with respect to the amount in controversy and that petitioners
meet the net worth requirement. Respondent also concedes that
petitioners exhausted their administrative remedies and that they
have not unreasonably protracted this proceeding. However,
respondent argues that her position was substantially justified.
If that question is resolved in favor of petitioners, there is a
further question as to the amount of the litigation costs.
Whether Respondent's Position Was Substantially Justified
A position is "substantially justified" when it is
"justified to a degree that could satisfy a reasonable person."
Pierce v. Underwood, 487 U.S. 552, 565 (1988). It is not enough
that a position simply has enough merit to avoid sanctions for
frivolousness; it must have a "reasonable basis both in law and
fact". Id. at 564. The burden of proving no substantial
justification is on the taxpayers. Rule 232(e); Estate of
Johnson v. Commissioner, 985 F.2d 1315, 1318 (5th Cir. 1993);
Baker v. Commissioner, 83 T.C. 822, 827 (1984), vacated and
remanded on other grounds 787 F.2d 637 (D.C. Cir. 1986).
Whether the position of the United States in this proceeding
was substantially justified depends on whether respondent's
positions and actions were reasonable in light of the facts of
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