- 7 - reasonable basis in both fact and law. Pierce v. Underwood, 487 U.S. 552, 565 (1988); Swanson v. Commissioner, 106 T.C. 76, 86 (1996). We examine the facts known to the Commissioner at the time the position was taken. Coastal Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 689 (1990). The fact that the Commissioner eventually loses or concedes a case is not determinative of whether a taxpayer is entitled to reasonable litigation and administrative costs. Sokol v. Commissioner, 92 T.C. 760, 767 (1989). Administrative Proceeding We first consider whether respondent's position during the administrative proceeding was substantially justified. The sole issue involved in the administrative proceeding was whether the $750,000 payment petitioner received in 1992 from Human was periodic alimony under Georgia law, thereby includable in her income, or lump-sum alimony under Georgia law and thus excludable from her income. On August 10, 1995, shortly after the IRS initiated an examination of petitioner's 1992 return, one of petitioner's attorneys met with Merlon Harper (Harper), the IRS agent conducting the examination. During that meeting, petitioner's attorney explained that the $750,000 payment received from Human was in the nature of a property settlement and not includable in her income. In addition, petitioner's attorney submitted a legalPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
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