- 9 -
430, 443 (1997). A position has a reasonable basis in fact if
there is such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion. See Pierce v. Underwood,
supra at 564-565. The reasonableness of respondent's position
and conduct necessarily requires considering what respondent knew
at the time. Cf. Rutana v. Commissioner, 88 T.C. 1329, 1334
(1987); DeVenney v. Commissioner, 85 T.C. 927, 930 (1985). Thus,
in determining whether respondent acted reasonably, this Court
must "consider the basis for respondent's legal position and the
manner in which the position was maintained." Wasie v.
Commissioner, 86 T.C. 962, 969 (1986).
The fact that the Commissioner eventually loses or concedes
the case is not determinative as to whether the taxpayer is
entitled to an award of administrative or litigation costs. See
Sokol v. Commissioner, 92 T.C. 760, 767 (1989); Wasie v.
Commissioner, supra at 968-969. It remains, however, a relevant
factor to consider in determining the degree of the
Commissioner's justification. See Estate of Perry v.
Commissioner, 931 F.2d 1044, 1046 (5th Cir. 1991); Powers v.
Commissioner, 100 T.C. 457, 470, 472 (1993), affd. in part and
revd. in part 43 F.3d 172 (5th Cir. 1995).
In some cases courts have adopted an issue-by-issue approach
to section 7430, apportioning the requested awards between those
issues for which the respondent was, and those issues for which
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