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proceeding in this Court. Sec. 7430(c)(7)(A) and (B); Huffman v.
Commissioner, supra at 1143-1147; see also Caparaso v.
Commissioner, T.C. Memo. 1993-255. For purposes of the
administrative proceeding, respondent took a position on August
9, 1994, the date of the notice of deficiency. Sec.
7430(c)(7)(B). For purposes of the proceeding in this Court,
respondent took a position on January 17, 1995, the date she
filed her answer. Huffman v. Commissioner, supra at 1148.
Petitioner contends that respondent's position was not
justified when taken. Respondent counters that her position was
substantially justified. We agree with petitioner.
Under Golsen v. Commissioner, 54 T.C. 742, 756-757 (1970),
affd. 445 F.2d 985 (10th Cir. 1971), we are obligated to follow
the law as stated by the Court of Appeals in the circuit to which
this case is appealable. We thus consider whether respondent was
substantially justified pursuant to precedent established by the
U.S. Court of Appeals for the Fifth Circuit.
In Portillo v. Commissioner, 932 F.2d 1128 (5th Cir. 1991)
(Portillo I), affg. in part and revg. in part T.C. Memo. 1990-68,
the taxpayer, a self-employed painting subcontractor, had filed a
Federal income tax return reporting that $10,800 of income had
been received from a contractor. The contractor later submitted
to the IRS a Form 1099 that reported a $35,305 payment from the
contractor to the taxpayer. The Commissioner then issued a
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