9
respondent was not substantially justified because respondent
failed to cite any authority for the position that the filing of
joint returns precluded petitioners from reallocating income and
expenses in the manner reported on their 1987 return. In support
thereof, petitioners cite a portion of our decision in Cox v.
Commissioner, supra:
Respondent has not, however, pointed us to any authority
that the filing of a joint return somehow changes the basic
tax nature of the items in question, and we simply believe
that respondent is incorrect in her position. * * *
Id. Petitioners also contend that respondent "consistently
ignored the Tenancy By The Entirety property and the attributes
and benefits that go with said property". We find petitioners'
arguments to be without merit.
First, although respondent failed to cite any authority for
her alternative argument regarding petitioners' joint return, we
clearly stated that the issue was one of first impression before
this Court. Notwithstanding our disagreement with respondent's
argument, we recognized that there were no cases directly on
point with respect to the issue in the underlying case. If the
law is unclear, or the question raised is one of first
impression, the Commissioner has greater justification to
litigate the matter. See Stebco, Inc. v. United States, 939 F.2d
686, 688 (9th Cir. 1991); Blanco Invs. & Land, Ltd. v.
Commissioner, T.C. Memo. 1988-175.
We believe respondent's position was incorrect, but that
petitioner has not shown that respondent's position lacked a
reasonable basis in fact or law. Respondent's position was based
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