- 4 - parties primarily dispute, however, whether respondent's position in the judicial proceeding was substantially justified. Petitioners contend that respondent's position in the judicial proceeding was not substantially justified. Respondent asserts that it was reasonable to argue that petitioners did not engage in their horse breeding and horse racing activities for profit. We agree with respondent. For the reasons set forth below, we shall deny petitioners' motion for award of reasonable litigation costs. Position of the United States The position taken by the United States, for purposes of litigation costs, is the position of the United States in a judicial proceeding. See sec. 7430(c)(7)(A). Respondent took a position in the judicial proceeding herein on the date respondent's answer was filed--March 4, 1997. See Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992), affg. in part and revg. in part T.C. Memo. 1991-144. Substantial Justification The Commissioner's position is substantially justified if that position could satisfy a reasonable person and if it has a reasonable basis in both fact and law. See Pierce v. Underwood, 487 U.S. 552, 565 (1988); Swanson v. Commissioner, 106 T.C. 76, 86 (1996). We examine the facts known to the Commissioner at the time the position was taken. See Coastal Petroleum Refiners,Page: Previous 1 2 3 4 5 6 7 8 Next
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