-11-
deductions for research and development of computer software, and
most significantly, that ASAP's use of the cash method of
accounting did not yield a clear reflection of income.
Whether respondent's position was not substantially
justified turns on a finding of reasonableness, based upon all
the facts and circumstances, as well as legal precedents relating
to the case. Pierce v. Underwood, 487 U.S. 552 (1988); Coastal
Petroleum Refiners, Inc. v. Commissioner, supra at 694-695; Sher
v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th
Cir. 1988); DeVenney v. Commissioner, 85 T.C. 927, 930 (1985). 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. 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. The Commissioner cannot escape an
award for costs pursuant to section 7430 simply because a case
presents a question of fact. Minahan v. Commissioner, 88 T.C.
492, 500-502 (1987).
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