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petitioners satisfy the net worth requirements. Respondent also
concedes that petitioners substantially prevailed with respect to
the amounts in controversy.
Whether the Position of the United States was Substantially
Justified
Petitioners must prove that the position of the United
States in this administrative proceeding was not substantially
justified. Sec. 7430(c)(4)(A)(i); Rule 232(e). We apply the
"not substantially justified" standard as of the date that
respondent takes her position in the case. For purposes of an
administrative proceeding, respondent generally takes her
position on the date she issues the notice of deficiency. Sec.
7430(c)(7)(B); Han v. Commissioner, T.C. Memo. 1993-386.
Whether respondent's position was "not substantially
justified" turns on an analysis of all the facts and
circumstances, as well as any relevant legal precedents. Coastal
Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 688
(1990); Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861
F.2d 131 (5th Cir. 1988); see also H. Rept. 97-404, at 12 (1981).
We must consider the basis for respondent's position and the
manner in which that position was maintained. Wasie v.
Commissioner, 86 T.C. 962, 968-969 (1986). A position is
substantially justified if the position is "justified to a degree
12(...continued)
proceedings commenced after July 30, 1996.
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