5
Petitioners bear the burden of proving that the position of
respondent was not substantially justified. Rule 232(e); Baker
v. Commissioner, 83 T.C. 822, 827 (1984), vacated and remanded on
other grounds 787 F.2d 637 (D.C. Cir. 1986). In order to meet
this burden, petitioners must show that legal precedent does not
substantially support the position of respondent given the facts
available to respondent. Coastal Petroleum Refiners, Inc. v.
Commissioner, 94 T.C. 685, 688 (1990); DeVenney v. Commissioner,
85 T.C. 927, 930 (1985). A determination of reasonableness must
be based upon all the facts and circumstances, as well as any
legal precedents relating to the case. DeVenney v. Commissioner,
supra. We may consider, among other factors, whether respondent
used the costs and expenses of litigation to extract unjustified
concessions from petitioners, whether respondent pursued the
litigation to harass or embarrass petitioners, or whether
respondent pursued the litigation for political reasons. Rutana
v. Commissioner, 88 T.C. 1329 (1987); DeVenney v. Commissioner,
supra. A position is "substantially justified" when it is
"justified to a degree that could satisfy a reasonable person".
Pierce v. Underwood, 487 U.S. 552, 565 (1988). It is not enough
that a position simply possesses enough merit to avoid sanctions
for frivolousness; it must have a "reasonable basis both in law
and fact". Id.; see, e.g., Hanson v. Commissioner, 975 F.2d
1150, 1153 (5th Cir. 1992).
Respondent's loss or concession of an issue does not, ipso
facto, render respondent's position not substantially justified.
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