- 9 -- 9 -
the notice of deficiency was issued. Id.; Williford v.
Commissioner, T.C. Memo. 1994-135.
Respondent's position is substantially justified if it is
justified to a degree that could satisfy a reasonable person and
has a reasonable basis both in law and fact.5 Pierce v,
Underwood, 487 U.S. 552, 565 (1988); Nalle v. Commissioner, 55
F.3d 189, 191 (5th Cir. 1995), affg. T.C. Memo. 1994-182. The
assessment of reasonableness is based on all the facts and
circumstances surrounding the proceeding. Nalle v. Commissioner,
supra at 191. The burden of proof on this issue is upon
respondent. Sec. 7430(c)(4)(B).6
Respondent's concession of the case does not in itself
compel the conclusion that respondent's position was not
substantially justified. Hanson v. Commissioner, 975 F.2d 1150,
1155-1156 (5th Cir. 1992), revg. an unpublished order of this
Court; Swanson v. Commissioner, supra at 94. Rather, it remains
4(...continued)
Cir. 1971).
5 The substantially justified standard is the same as the
reasonableness standard of prior law. Sher v. Commissioner, 89
T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir. 1988).
6 Sec. 7430 was amended by the Taxpayer Bill of Rights 2, Pub.
L. 104-168, sec. 701(a) and (b), 110 Stat. 1463 (1996), to shift
the burden of proof on this issue to respondent. The amendment
is effective with respect to proceedings commenced after July 30,
1996. Id. at secs. 701(d), 702(b), 703(b), and 704(b), 110 Stat.
1464.
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