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example, there appears to be no instance of respondent's failing
to consider a claim made by PCCL for entitlement to a deduction
that had been supported by sufficient proof. In the context of
what respondent knew at the time the notices of deficiency were
issued and the petitions were answered, there was substantial
evidence to support respondent's position.
3. Conclusion
We conclude that respondent had a reasonable basis in fact
and law for all issues raised in the notices of deficiency based
on the investigation of these cases conducted by respondent
before trial. See Reinhardt v. Commissioner, T.C. Memo. 1995-82.
We also conclude that respondent's position that petitioners and
PCCL were liable for the penalties for fraud, or alternatively,
for negligence for 1993 had a reasonable basis in both fact and
law. We hold that respondent has established that respondent's
position was substantially justified and that neither petitioners
nor PCCL are entitled to an award for administrative and
litigation costs under section 7430. Petitioners' and PCCL's
motions will therefore be denied.11
To reflect the foregoing,
Appropriate orders and
decisions will be entered.
11 As a result of our conclusions herein, we need not
decide whether the amounts of petitioners' claimed administrative
and litigation costs are reasonable.
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