13
1984); Powers v. Commissioner, supra. For a position to be
substantially justified, there must be substantial evidence to
support it. Pierce v. Underwood, supra at 564-565; Powers v.
Commissioner, supra at 473.
The fact that the Commissioner eventually loses or concedes
a case does not establish that a taxpayer is entitled to an award
of reasonable litigation and administrative costs. Wilfong v.
United States, 991 F.2d 359, 364 (7th Cir. 1993); Hanson v.
Commissioner, 975 F.2d 1150, 1153 (5th Cir. 1992); Sokol v.
Commissioner, 92 T.C. 760, 767 (1989). However, it is a factor
to be considered. Estate of Perry v. Commissioner, 931 F.2d
1044, 1046 (5th Cir. 1991); Powers v. Commissioner, supra at 471.
C. Whether Respondent's Position in the Notice of Deficiency
Was Substantially Justified
1. Background--Accumulated Earnings Tax
A taxpayer is liable for accumulated earnings tax if it is
formed or availed of to avoid income tax for its shareholders by
permitting earnings and profits to accumulate instead of being
divided or distributed. Sec. 532(a); Hughes, Inc. v.
Commissioner, 90 T.C. 1, 15 (1988). However, the accumulated
earnings tax does not apply if a corporation lacks the proscribed
purpose. Technalysis Corp. v. Commissioner, 101 T.C. 397, 403
(1993); Pelton Steel Casting Co. v. Commissioner, 28 T.C. 153,
173 (1957), affd. 251 F.2d 278 (7th Cir. 1958).
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