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the taxpayer receives the notice of the decision of the Internal
Revenue Service Office of Appeals, or (ii) the date of the notice
of deficiency. Sec. 7430(c)(7). Respondent's position in the
notice of deficiency and in the answer was that the decedent and
Mrs. Spear had no cash hoard and were liable for the addition to
tax for fraud. Thus, in this case, respondent's position in both
the judicial and the administrative proceeding was the position
taken in the notice of deficiency.
2. Substantially Justified Standard
The substantially justified standard requires that
the Government's position be justified to a degree that would
satisfy a reasonable person. Pierce v. Underwood, 487 U.S. 552,
565 (1988); Rickel v. Commissioner, 900 F.2d 655, 665 (3d Cir.
1990), affg. in part and revg. in part on other grounds 92 T.C.
510 (1989). That standard applies to motions for litigation
costs under section 7430. Nicholson v. Commissioner, 60 F.3d
1020, 1025-1026 (3d Cir. 1995), revg. and remanding T.C. Memo.
1994-280. To be substantially justified, the Commissioner's
position must have a reasonable basis in both law and fact.
Pierce v. Underwood, supra; Nicholson v. Commissioner, supra at
1026. For a position to be substantially justified, there must
be "substantial evidence" to support it. Pierce v. Underwood,
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