John F. and Tracy L. Barford, et al. - Page 7

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          Commissioner, 86 T.C. 962, 968-969 (1986).  Petitioners bear the            
          burden of proof on this issue.  Rule 232(e); Coastal Petroleum              
          Refiners, Inc. v. Commissioner, 94 T.C. 685, 688 (1990).                    
          Respondent's litigation position is substantially justified if              
          it has a reasonable basis in both law and fact.  Pierce v.                  
          Underwood, 487 U.S. 552, 565 (1988).  We believe the record in              
          this case establishes the overall reasonableness of respondent's            
          position with regard to the section 482 adjustment.                         
               Petitioners argue that respondent's position regarding the             
          imputation of interest income under section 482 was not                     
          substantially justified.  Petitioners argue that: (1) The                   
          deficiencies totaled $1,827,492, and the decisions of the Court             
          as to such deficiencies totaled $47,761.53; (2) after 12 years              
          of administrative proceedings and litigation, respondent                    
          capitulated and agreed that the valuations of RAM Drilling stock            
          were 10 times too high; and  (3) respondent conceded that the               
          interest on certain corporate notes should not have been 14                 
          percent, and that respondent later conceded this issue in its               
          entirety, and stipulated that no interest should be imputed.  In            
          essence, petitioners contend that because they prevailed so                 
          overwhelmingly, they should be allowed to recover their full                
          costs.  We disagree.                                                        
               This Court has consistently held that a concession by                  
          respondent is not determinative as to whether respondent's                  

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