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does not agree that his position was not substantially justified,
he does not agree that petitioners exhausted the administrative
remedies available to them within the Internal Revenue Service,
and he does not agree that the costs claimed are reasonable.
We first consider whether respondent's position in each case
was substantially justified. For the reasons stated, infra, we
find that it was.
Whether respondent's position was substantially justified
depends on whether respondent's position and actions were
reasonable in light of the facts of the case and applicable
precedents. Bragg v. Commissioner, 102 T.C. 715, 716 (1994);
Powers v. Commissioner, 100 T.C. 457, 470-471 (1993), affd. in
part and revd. and remanded in part 43 F.3d 172 (5th Cir. 1995).
The fact that respondent concedes the case is not necessarily
indicative that a position is not substantially justified. Price
v. Commissioner, 102 T.C. 660, 662-665 (1994), affd. without
published opinion sub nom. TSA/THE Stanford Associates, Inc. v.
Commissioner, 77 F.3d 490 (9th Cir. 1996). A position is
"substantially justified" when it is "justified to a degree that
could satisfy a reasonable person." Pierce v. Underwood, 487
U.S. 552, 565 (1988).
Respondent's disallowance of the alimony claimed by
petitioners on their 1993 and 1994 returns was predicated upon
the provisions of the judgment entered by the court in 1987,
dissolving the marriage of petitioner and his former wife, Kim T.
Bettencourt. That judgment provided that the legal care, custody
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