- 15 -
386. For purposes of the administrative proceedings, respondent
took a position on August 11, 1992, and April 7, 1993, the dates
the notices of deficiency for tax years 1988 and 1989,
respectively, were issued. Sec. 7430(c)(7)(B). For purposes of
the proceeding in this Court, respondent took positions for the
1988 and 1989 tax years on December 11, 1992, and August 18,
1993, respectively, the dates respondent filed the answer in each
of the cases. See Huffman v. Commissioner, 978 F.2d 1139, 1143-
1147 (9th Cir. 1992), affg. in part, revg. in part on other
grounds, and remanding T.C. Memo. 1991-144.
Whether respondent's position was not substantially
justified turns on a finding of reasonableness, based upon all
the facts and circumstances, as well as the legal precedents
relating to the case. Pierce v. Underwood, 487 U.S. 552 (1988);
Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131
(5th Cir. 1988). A position is substantially justified if the
position is "justified to a degree that could satisfy a
reasonable person." Pierce v. Underwood, supra at 565; Powers v.
Commissioner, 100 T.C. 457, 470-471 (1993). A position that
merely possesses enough merit to avoid sanctions for
frivolousness will not satisfy this standard; rather, it must
have a "reasonable basis both in law and fact". Pierce v.
Underwood, supra at 564-565.
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