- 16 - T.C. Memo. 1994-182. Respondent’s position may be incorrect and yet be substantially justified “if a reasonable person could think it correct”. Pierce v Underwood, 487 U.S. at 566 n.2. Whether respondent acted reasonably in the instant case ultimately turns on the available information which formed the basis for respondent’s position, as well as on the law relevant to the instant case. Nalle v. Commissioner, 55 F.3d at 191-192; Coastal Petroleum Refiners v. Commissioner, 94 T.C. 685, 688-690 (1990). The fact that respondent eventually loses or concedes a case does not by itself establish that respondent’s position is unreasonable. Estate of Perry v. Commissioner, 931 F.2d 1044, 1046 (5th Cir. 1991)(award of litigation costs in Court of Appeals), affg. T.C. Memo. 1990-123; Swanson v. Commissioner, 106 T.C. 76, 94 (1996). However, it is a factor that may be considered. Nalle v. Commissioner, 55 F.3d at 192 n.7; Estate of Perry v. Commissioner, 931 F.2d at 1046. In determining whether respondent’s position was not substantially justified, the question is whether respondent knew or should have known that the Government’s position was invalid at the time that respondent took the position in the litigation. Nalle v. Commissioner, 55 F.3d at 191; Coastal Petroleum Refiners v. Commissioner, 94 T.C. at 689.Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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