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September 16, 1992. Although initially disputed by respondent,
it is clear, and respondent now concedes that the document was
first received in the Service Center on March 18, 1991, at a time
when the election could have been effective for NTI's 1991 year.
Secs. 1362, 7502. We view respondent's actions with respect to
the initial receipt of the Form 2553 on March 18, 1991, to be
relevant in determining whether respondent's position in the case
in both the administrative and judicial proceedings should be
considered substantially justified.
Whether respondent's position is substantially justified
turns on a finding of reasonableness, based upon all of the
surrounding facts and circumstances, as well as legal precedents
relating to the case. Pierce v. Underwood, 487 U.S. 552, 565
(1988); Coastal Petroleum Refiners, Inc. v. Commissioner, 94 T.C.
685, 694-695 (1990). 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. We may
consider the reasonableness of respondent's position in the
administrative proceeding separately from respondent's position
in the judicial proceeding. Huffman v. Commissioner, 978 F.2d
1139, 1144-1147 (9th Cir. 1992), affg. in part, revg. in part,
and remanding on another issue T.C. Memo. 1991-144. In this
case, however, because the positions are the same, we consider
them in a single analysis.
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