12
established on June 13, 1996, when the notice of deficiency was
sent.
The position taken by the United States, for purposes of an
award of litigation costs, is the position of the United States
in a judicial proceeding. Sec. 7430(c)(7)(A). Respondent took a
position in the judicial proceeding in this case on November 12,
1996, when respondent's answer was filed. See Huffman v.
Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992), affg. in part,
revg. in part and remanding T.C. Memo. 1991-144.
2. Substantially Justified Standard
The parties dispute whether respondent's position in the
administrative and judicial proceedings was substantially
justified.
The Commissioner's position is substantially justified if
that position could 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); Swanson v. Commissioner, 106
T.C. 76, 86 (1996); Powers v. Commissioner, 100 T.C. 457, 470,
473 (1993), affd. on this issue, revd. in part and remanded on
other issues 43 F.3d 172 (5th Cir. 1995). To be substantially
justified, the Commissioner's position must have a reasonable
basis in both law and fact. Pierce v. Underwood, supra; Hanover
Bldg. Matls., Inc. v. Guiffrida, 748 F.2d 1011, 1015 (5th Cir.
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