Eddie Mills, Jr. - Page 7




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               Petitioner must also establish that he exhausted the                   
          administrative remedies available to him within the IRS and that            
          he did not unreasonably protract the proceedings.  See sec.                 
          7430(b)(1), (4).  Petitioner bears the burden of proof with                 
          respect to each of the preceding requirements.  See Rule 232(e).            
               Whether the Commissioner's position is substantially                   
          justified depends upon a finding of reasonableness based upon               
          both law and fact.  See Pierce v. Underwood, 487 U.S. 552, 565              
          (1988); Powers v. Commissioner, 100 T.C. 457, 470 (1993), affd.             
          in part, revd. in part on another issue and remanded 43 F.3d 172            
          (5th Cir. 1995).  The phrase "substantially justified" does not             
          mean justified to a high degree but "'justified in substance or             
          in the main'--that is, justified to a degree that could satisfy a           
          reasonable person".  Pierce v. Underwood, supra at 565.                     
               The taxpayer need not show bad faith to establish that the             
          Commissioner's position was not substantially justified for                 
          purposes of a motion for administrative or litigation costs under           
          section 7430.  See Estate of Perry v. Commissioner, 931 F.2d                
          1044, 1046 (5th Cir. 1991); Powers v. Commissioner, supra at 471.           
               The Commissioner's concession of a case is a factor to be              
          considered.  See Powers v. Commissioner, supra.  The fact,                  
          however, that the Commissioner eventually concedes the case is              
          not by  itself sufficient to establish that a position is                   
          unreasonable.  See Estate of Merchant v. Commissioner, 947 F.2d             





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