Bryan J. Brennan and Kathryn J. Brennan, a/k/a/ Kathryn J. Law - Page 4

                                        - 4 -                                         
          enactment of the Taxpayer Bill of Rights 2, Pub. L. 104-168, sec.           
          701, 110 Stat. 1452, 1463 (1996).  They bear the burden of                  
          proving that respondent's position in the proceedings was not               
          substantially justified.  Sec. 7430(c)(4)(A)(i); Rule 232(e).               
               A position is "substantially justified" when it is                     
          "justified to a degree that could satisfy a reasonable person."             
          Pierce v. Underwood, 487 U.S. 552, 565 (1988).  It is not enough            
          that a position simply has enough merit to avoid sanctions for              
          frivolousness; it must have a "reasonable basis both in law and             
          fact".  Id.                                                                 
               Whether the position of the United States in this proceeding           
          was substantially justified depends on whether respondent's                 
          positions and actions were reasonable in light of the facts of              
          the case and the applicable legal precedents.  Sher v. Commis-              
          sioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir.                 
          1988).  The inquiry must be based on the facts reasonably avail-            
          able to respondent when the position was maintained.  Coastal               
          Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 689                  
          (1990).  The fact that respondent did not prevail in the under-             
          lying litigation does not require a determination that the                  
          position of the Internal Revenue Service was unreasonable, Broad            
          Ave. Laundry & Tailoring v. United States, 693 F.2d 1387, 1391-             
          1392 (Fed. Cir. 1982); however, it remains a factor to be con-              
          sidered.  Heasley v. Commissioner, 967 F.2d 116, 120 (5th Cir.              
          1992), affg. in part and revg. in part and remanding T.C. Memo.             




Page:  Previous  1  2  3  4  5  6  7  8  Next

Last modified: May 25, 2011