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685, 688 (1990). Respondent must prove that his position was
substantially justified. See sec. 7430(c)(4)(B). Although the
concession of a case is a factor to be considered in determining
whether a position is substantially justified, such concession is
not by itself sufficient to establish an unreasonable position.
See Estate of Merchant v. Commissioner, 947 F.2d 1390, 1395 (9th
Cir. 1991), affg. T.C. Memo. 1990-160; Powers v. Commissioner,
100 T.C. 457, 471 (1993), affd. on this issue, revd. in part and
remanded on other issues 43 F.3d 172 (5th Cir. 1995).
Petitioner seeks only litigation costs in this matter;
therefore, we must examine respondent's position in the judicial
proceeding. See sec. 7430(c)(7)(A). Respondent first took a
position in the judicial proceeding on the date respondent's
answer was filed--November 16, 1998. See California Marine
Cleaning, Inc. v. Commissioner, T.C. Memo. 1998-311; Kahn-Langer
v. Commissioner, T.C. Memo. 1995-527; Lockett v. Commissioner,
T.C. Memo. 1994-144 (citing Huffman v. Commissioner, 978 F.2d
1139, 1148 (9th Cir. 1992), affg. in part, revg. in part and
remanding on other issues T.C. Memo. 1991-144).
Respondent contends the position of the United States was
substantially justified on the basis of the following information
the Internal Revenue Service possessed at the time the notice of
deficiency was issued: (1) Both petitioner and Mr. Sherbo
claimed earned income credit with respect to Liane on their 1995
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