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petitioner was not liable for the additions to tax, and the
parties reached a basis for settlement.
For purposes of determining the reasonableness of
respondent's position in the answer, the Court considers those
facts known to respondent at the time the answer was filed. At
the time the answer was filed, respondent did not have the
benefit of the substantiating information petitioner later
provided at the appeals conference. Consequently, the Court
holds that respondent's position was reasonable and, therefore,
substantially justified at the time the answer was filed.
Further, the Court holds that respondent was substantially
justified in maintaining the positions taken in the answer up to
the time of settlement. Petitioner, therefore, is not entitled
to a recovery of litigation costs.
Since respondent's position was substantially justified in
both the administrative and the litigation aspects of this case,
it is not necessary to decide the amount of petitioner's
reasonable administrative and litigation costs. Petitioner's
motion, therefore, will be denied.
An appropriate order and
decision will be entered.
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Last modified: May 25, 2011