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delaying the production of relevant information until after the
Appeals Division had issued the notice of deficiency. Respondent
was unable to either admit or deny that the costs claimed were
reasonable, for lack of specific information.
Petitioner argues that our finding of no fraud and the
computation of tax and additions to tax "which is minimal in
comparison to the notice of deficiency" indicates that respondent
was not substantially justified in her determinations in this
case. We disagree.
A position is substantially justified if the position is
"justified to a degree that could satisfy a reasonable person".
Pierce v. Underwood, 487 U.S. 552, 565 (1988). Additionally, the
position must have a reasonable basis both in law and in fact.
Id. Petitioners have not demonstrated that respondent's position
was not substantially justified. They have not proved that
respondent's position lacked a reasonable basis in law or fact at
the time the notice of deficiency was issued or the answer was
filed, in light of the information then available to respondent.
First, we do not agree with petitioners' calculation of the
total amount of taxes and additions to tax due in accordance with
our opinion, which they now assert is $10,604. Respondent
originally determined income tax deficiencies totaling $112,463
plus additions to tax, including the fraud addition. Petitioners
stipulated total deficiencies in the amount of $65,934. In
addition, we found them liable for the negligence and substantial
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