- 22 -
(1938)). Respondent's position may be incorrect but
substantially justified "if a reasonable person could think it
correct". Id. at 566 n.2. Thus, whether respondent acted
reasonably in the instant case ultimately turns upon those
available facts which formed the basis for the position taken in
the notice of deficiency and during the litigation, as well as
upon any legal precedents related to the case. DeVenney v.
Commissioner, supra at 930; see Nalle v. Commissioner, 55 F.3d
189, 191-192 (5th Cir. 1995), affg. T.C. Memo. 1994-182; Coastal
Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 688
(1990).
The fact that the Commissioner eventually loses or concedes
a case does not by itself establish that the position taken is
unreasonable. Estate of Perry v. Commissioner, 931 F.2d 1044,
1046 (5th Cir. 1991); Swanson v. Commissioner, 106 T.C. 76, 94
(1996). However, it is a factor that may be considered. Estate
of Perry v. Commissioner, supra at 1046; Powers v. Commissioner,
supra at 471.
We conclude that petitioner has failed to prove that
respondent's position did not have a reasonable basis in fact and
law and was not strongly supported by substantial evidence.
Although petitioner claimed to be a mere agent or conduit of
Ohanesian and SRI in the administrative proceeding before the IRS
and in the judicial proceeding before the Tax Court, petitioner
had taken the exactly opposite tack in its State court suit. In
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011