- 9 -
88 T.C. 1329, 1334 (1987); DeVenney v. Commissioner, 85 T.C. 927,
930 (1985).
The Commissioner’s position can be justified even if
ultimately rejected by the Court. See Wilfong v. United States,
991 F.2d 359, 364 (7th Cir. 1993). The fact that the
Commissioner eventually loses on the merits or concedes a case is
not determinative of whether a taxpayer is entitled to reasonable
litigation and administrative costs. See Sokol v. Commissioner,
92 T.C. 760, 767 (1989).
We now consider whether respondent’s position was
substantially justified. We must look at all facts and
circumstances as well as the legal precedents relating to the
case, bearing in mind that petitioners bear the burden of proof.
See Coastal Petroleum Refiners, Inc. v. Commissioner, supra at
694-695. The issues for decision in the underlying case
pertained to the use of the income forecast method of
depreciation for rental units utilized in rent-to-own businesses.
Respondent’s position in the notice of deficiency was that the
income forecast method of depreciation was not an approved method
for depreciating assets other than television films, taped shows
for reproduction of motion picture films, sound recordings, and
other property of similar character. Respondent further contends
in the notice of deficiency that the rental units on which
petitioners have used the income forecast method of depreciation
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