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requirements will preclude an award of costs. Minahan v.
Commissioner, 88 T.C. 492, 497 (1987). For the reasons discussed
below, we conclude that petitioner is entitled to recover
administrative and litigation costs.
Respondent has conceded that petitioner has substantially
prevailed and that she meets the net worth requirement. We
address the remaining requirements of section 7430 in turn.
I. Substantial Justification
Respondent's position is substantially justified if the
position was justified to a degree that would satisfy a
reasonable person. Pierce v. Underwood, 487 U.S. 552, 565
(1988); Lenox v. Commissioner, 998 F.2d 244, 248 (5th Cir. 1993),
revg. in part T.C. Memo. 1992-382. To meet this standard,
respondent's position must have a basis in fact and law. Pierce
v. Underwood, supra; Lenox v. Commissioner, supra.
To recover administrative and litigation costs, petitioner
must prove that respondent's positions in both the administrative
proceeding and the proceeding in this Court were not
substantially justified. Sec. 7430(c)(4)(A)(i), (7)(A) and (B);
Huffman v. Commissioner, 978 F.2d 1139, 1143-1147 (9th Cir.
1992), affg. in part, revg. in part on other grounds and
remanding T.C. Memo. 1991-144; Stieha v. Commissioner, 89 T.C.
784, 790 n.5 (1987). This "not substantially justified" standard
under section 7430 is applied as of the separate dates respondent
took positions in the administrative proceeding and the
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