D. Sherman and Maxine M. Cox - Page 5

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               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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