- 5 -
191. A position has a reasonable basis in fact if there is such
relevant evidence as a reasonable mind might accept as adequate
to support a conclusion. Pierce v. Underwood, supra at 564-565.
The inquiry must be based on the facts reasonably available to
the Commissioner when the position was maintained. Coastal
Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 689
(1990). The fact that the Commissioner loses on the merits does
not establish that a position was not substantially justified,
but it is a factor to be considered. Nalle v. Commissioner,
supra at 192; Wilfong v. United States, 991 F.2d 359, 364 (7th
Cir. 1993); Estate of Perry v. Commissioner, 931 F.2d 1044, 1046
(5th Cir. 1991); Powers v. Commissioner, 100 T.C. 457, 471
(1993). The failure of the evidence favoring the Commissioner's
position to persuade the trier of fact does not mean that the
Commissioner's position did not have a reasonable basis in fact
unless that evidence is unusually scanty or unworthy of belief.
VanderPol v. Commissioner, 91 T.C. 367, 370 (1988). The
Commissioner cannot escape an award of costs pursuant to section
7430 simply because a case presents questions of fact, Minahan v.
Commissioner, supra at 500-502, or of witness credibility,
Windsor Production Corp. v. Commissioner, T.C. Memo. 1995-556. A
position is not substantially justified in law if legal precedent
does not substantially support the Commissioner's position given
the facts available to the Commissioner. Coastal Petroleum
Refiners, Inc. v. Commissioner, supra at 688.
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