Galedrige Construction, Inc. - Page 6

          proceeding was not substantially justified.  Sec.                           
          7430(c)(4)(A)(i).  (2) The taxpayer substantially prevailed with            
          respect to the amount in controversy or with respect to the most            
          significant issue or set of issues presented.  Sec.                         
          7430(c)(4)(A)(ii).  (3) The taxpayer is either an individual                
          whose net worth does not exceed $2 million, or an owner of an               
          unincorporated business, or any partnership, corporation, etc.,             
          the net worth of which does not exceed $7 million at the time the           
          petition is filed.  Sec. 7430(c)(4)(A)(iii); 28 U.S.C. sec.                 
          2412(d)(2)(B) (1988).                                                       
               Respondent concedes that petitioner substantially prevailed            
          in Galedrige I.  In addition, we are satisfied, based upon                  
          petitioner's submissions to this Court, that petitioner's net               
          worth was less than $7 million when its petition was filed.  Rule           
          231(b)(5).  Thus, the only issue remaining for decision is                  
          whether the position of the United States in the Court proceeding           
          was not substantially justified.                                            
               Position of the United States Not Substantially Justified              
               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, 94 T.C. 685, 688                  
          (1990).  In deciding this issue, we must identify the point at              
          which the United States is first considered to have taken a                 

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