- 6 -
Furthermore, for the sake of completeness, we note that even
if we granted an evidentiary hearing and found that petitioners
established that they met the net worth requirements, petitioners
still would not be entitled to an award of administrative and
litigation costs and attorney's fees. This is so because
petitioners are not the "prevailing party" for an additional
reason: Respondent established that the position of the United
States was substantially justified at both the administrative and
litigation level. See sec. 7430(c)(4)(B)(i).
The substantially justified standard is "essentially a
continuation of the prior law's reasonableness standard." See
Swanson v. Commissioner, 106 T.C. 76, 86 (1996). A position is
substantially justified if it is justified to a degree that could
satisfy a reasonable person and has a reasonable basis in both
fact and law. See Pierce v. Underwood, 487 U.S. 552, 565
(1988);4 Huffman v. Commissioner, 978 F.2d 1139, 1147 (9th Cir.
1992), affg. in part and revg. in part T.C. Memo. 1991-144;
Swanson v. Commissioner, supra at 86. A position that merely has
enough merit to avoid sanctions for frivolousness will not
satisfy this standard. See Pierce v. Underwood, supra at 566.
4 Although the dispute in Pierce v. Underwood, 487 U.S. 552
(1988), arose under the provisions of the Equal Access to Justice
Act (EAJA), 28 U.S.C. sec. 2412(d) (1994), the relevant
provisions of the EAJA are almost identical to the language of
sec. 7430. See Cozean v. Commissioner, 109 T.C. 227, 232 n.9
(1997). We, therefore, consider the holding in Pierce v.
Underwood, supra, to be applicable to the case before us. See
Cozean v. Commissioner, supra.
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