- 9 -
Pierce v. Underwood, supra at 564-565; Powers v. Commissioner,
supra at 473.
The fact that the Commissioner eventually loses or concedes
the case does not in itself establish that a position is
unreasonable. Wilfong v. United States, 991 F.2d 359, 364 (7th
Cir. 1993); Hanson v. Commissioner, 975 F.2d 1150, 1153 (5th Cir.
1992), revg. an unpublished Order of this Court. However, it is
a factor to be considered. Heasley v. Commissioner, 967 F.2d
116, 120 (5th Cir. 1992), affg. in part and revg. in part T.C.
Memo. 1991-189; Estate of Perry v. Commissioner, 931 F.2d 1044,
1046 (5th Cir. 1991); Powers v. Commissioner, supra at 471.
The taxpayer need not show bad faith to establish that the
Commissioner's position was not substantially justified for
purposes of a motion for litigation costs under section 7430.
Estate of Perry v. Commissioner, supra; Powers v. Commissioner,
supra.
b. Respondent's Claimed Basis in Fact
A taxpayer is liable for accumulated earnings tax if it is
formed or availed of to avoid income tax for its shareholders by
permitting earnings and profits to accumulate instead of being
divided or distributed. Sec. 532(a), Hughes, Inc. v.
Commissioner, 90 T.C. 1, 15 (1988). The most important factor
in deciding if the accumulated earnings tax applies is whether
a corporation accumulated earnings and profits beyond the
reasonable needs of the business. United States v. Donruss Co.,
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