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The United States’ position is substantially justified if it
is “justified to a degree that could satisfy a reasonable
person.” Pierce v. Underwood, 487 U.S. 552, 565 (1988). To be
substantially justified, the United States’ position need not be
correct but need only have a “reasonable basis both in law and
fact.” Id.; see also Wasie v. Commissioner, 86 T.C. 962, 969
(1986). Whether respondent’s position was substantially
justified depends upon the reasonableness of the position, based
on all the facts known to the respondent when he took positions
in the administrative and judicial proceedings. See Maggie
Management Co. v. Commissioner, 108 T.C. 430, 443 (1997);
DeVenney v. Commissioner, 85 T.C. 927, 931 (1985). The fact that
respondent eventually loses or concedes a case does not establish
that respondent’s position was unreasonable. See Sokol v.
Commissioner, 92 T.C. 760, 767 (1989); Wasie v. Commissioner,
supra at 969. The burden of proof is on respondent to show that
the position of the United States was substantially justified.
See sec. 7430(c)(4)(B)(i); Rule 232(e).
The substantive issues in the underlying case were: (1)
Whether petitioner and Theron were jointly liable for the 1990
deficiency as determined in the notice of deficiency, and (2)
whether petitioner qualified for relief from joint liability
pursuant to former section 6013(e) or section 6015.
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