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substantially justified. Because petitioner's amended motion is
only for litigation costs, and not administrative costs, we look
to respondent's position in the proceeding in this Court which is
set forth in the answer filed on August 12, 1997. Sec.
7430(c)(7)(A).
Petitioner contends that respondent's positions in the
answer and trial memorandum were not substantially justified or
were unreasonable based on the facts or the law. With respect to
the answer, petitioner generally contends that respondent failed
to exercise due diligence in answering the petition by ignoring
documents in respondent's possession. With respect to the trial
memorandum, petitioner contends that respondent's position was
based on a failure to review the documents in a timely manner.
Respondent contends that despite the many requests for
documents, petitioner failed to substantiate the greater portion
of her claimed deductions until shortly before the calendar call
on April 13, 1998. Respondent further contends that respondent
exercised due diligence in answering the petition, did not ignore
any documents in respondent's possession, and allowed
petitioner's deductions to the extent that they were
substantiated as evidenced in the notice of deficiency.
On this record, we conclude that respondent's position was
substantially justified. We find that "It was reasonable for
respondent not to concede the adjustments until [respondent] had
received and verified adequate substantiation for the items in
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