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The presence of the factors discussed above leads us to the
conclusion that respondent's position had a reasonable basis in
both law and fact. Pierce v. Underwood, 487 U.S. 552, 565
(1988); Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861
F.2d 131 (5th Cir. 1988). Accordingly, we hold that respondent's
position was substantially justified and that petitioners are not
entitled to litigation costs under section 7430. Based on this
holding, we need not consider respondent's alternative position
that the amount of costs claimed is not reasonable. Petitioners'
motion will therefore be denied.
An appropriate order will be
issued.
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Last modified: May 25, 2011