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By notice of deficiency, respondent determined the following
deficiency and additions to tax in petitioner's 1981 Federal
income tax:
Addition to Tax
Deficiency Sec. 6651(a)(1)Sec. 6653(a)(1)Sec. 6653(a)(2)Sec. 6654
$14,172.83 $3,543.21 $708.64 1 $1,085.00
1 50 percent of the interest due on $14,172.83
Under section 7430, a taxpayer may be awarded a judgment for
reasonable administrative and litigation costs if the taxpayer
establishes certain criteria and if respondent fails to establish
that the position of respondent was substantially justified.
Respondent concedes that petitioner substantially prevailed for
purposes of section 7430(c)(4)(A)(i). Respondent maintains that
his position was substantially justified.
In deciding the merits of a motion for litigation and
administrative costs, there are two time periods the Court must
consider. For administrative costs, the Court considers the
reasonableness of respondent's position from the earlier of the
date of receipt by the taxpayer of the notice of decision by the
Office of Appeals or the date of the notice of deficiency. Sec.
7430(c)(7)(B). For litigation costs, the Court considers the
reasonableness of respondent's position from the date the answer
was filed. Sec. 7430(c)(7)(A). Whether respondent's position
was substantially justified turns on a finding of reasonableness,
based upon all the facts and circumstances, as well as the legal
precedents relating to the case. Pierce v. Underwood, 487 U.S.
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Last modified: May 25, 2011