Carolyn B. Cooper - Page 11




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               We disagree.  As we stated above, petitioner finally                   
          submitted all of the requested documents to respondent's Appeals            
          officer on March 17, 1998.  On or before April 10, 1998,                    
          respondent conceded all of the issues in the notice of                      
          deficiency, and the signed stipulation was filed with the Court             
          on April 13, 1998.  In our view, respondent timely reviewed the             
          documents submitted by petitioner.  Due to the delay by                     
          petitioner in providing adequate documentation, we are persuaded            
          that respondent's Appeals officer was unable to review the                  
          documents prior to the submission of the trial memorandum.                  
               Thus, we are satisfied that respondent exercised due                   
          diligence in answering the petition, did not ignore documents in            
          respondent's possession, and reviewed the documents in a timely             
          manner.  We note that within 8 months after respondent's answer,            
          the parties entered into a stipulation of settlement.  The case             
          would have been resolved earlier if petitioner had provided                 
          respondent with the necessary documents.                                    
               Because respondent had a reasonable basis in fact and law              
          for the positions taken in the answer and the trial memorandum,             
          we hold that respondent's position was substantially justified,             
          and therefore petitioner was not the prevailing party within the            
          meaning of section 7430(c)(4).  Thus, we need not address the               
          issue of whether petitioner's claim for litigation costs was                
          reasonable.                                                                 





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