- 10 - affd. 861 F.2d 131 (5th Cir. 1988). For petitioners to prevail, respondent's position, as a matter of both fact and law, must not have been "justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, supra at 565; Wilkerson v. United States, supra at 119. Whether respondent's position has a reasonable basis in fact and law turns in part on whether there is "substantial evidence" to support it. Pierce v. Underwood, supra at 564-565; Powers v. Commissioner, 100 T.C. 457, 473 (1993). Respondent must have at least some relevant evidence sufficient to support her position. Respondent developed her position in the instant case based on her examination and investigation of petitioners' returns. Cf. Powers v. Commissioner, supra. In the notices of deficiency, respondent premised the adjustments primarily on petitioners' failure to substantiate items on their returns. Deductions are a matter of legislative grace, and petitioners bore the burden of establishing their entitlement thereto. New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). In addition, section 6001 imposed on petitioners an affirmative duty to maintain books and records sufficient to establish items reported on their returns. It was reasonable for respondent not to concede the adjustments until she had received and verified adequate substantiation for the items in question. Harrison v. Commissioner, 854 F.2d 263, 265 (7th Cir. 1988), affg. T.C. Memo. 1987-52; Sokol v. Commissioner, 92 T.C. 760, 765 (1989).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
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