-12-
The fact that respondent eventually loses or concedes the
case is not determinative as to whether the taxpayer is entitled
to an award of administrative or litigation costs. Sokol v.
Commissioner, 92 T.C. 760, 767 (1989); Wasie v. Commissioner, 86
T.C. 962, 968-969 (1986). It remains, however, a relevant factor
to consider in determining the degree of the Commissioner's
justification. Estate of Perry v. Commissioner, 931 F.2d 1044,
1046 (5th Cir. 1991); Powers v. Commissioner, supra at 470, 472.
Petitioner has the burden of establishing that respondent's
position was not substantially justified. Rule 232(e); Dixson
Intl. Serv. Corp. v. Commissioner, 94 T.C. 708, 715 (1990). For
petitioners to prevail, they must show that respondent's
position, in fact as well as in law, was not justified to a
degree that could satisfy a reasonable person. The
reasonableness of respondent's position and conduct necessarily
requires considering what respondent knew at the time. Cf.
Rutana v. Commissioner, 88 T.C. 1329, 1334 (1987); DeVenney v.
Commissioner, supra. Thus, in determining whether respondent
acted reasonably, this Court must "consider the basis for
respondent's legal position and the manner in which the position
was maintained." Wasie v. Commissioner, supra at 969.
In some cases courts have adopted an issue-by-issue approach
to section 7430, apportioning the requested awards between those
issues for which the respondent was, and those issues for which
respondent was not, substantially justified. See Powers v.
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