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position in each proceeding was substantially justified.
The position of the United States is substantially justified
if it is justified to a degree that could satisfy a reasonable
person and has a reasonable basis both in law and fact. See
Pierce v. Underwood, 487 U.S. 552, 563-565 (1988) (interpreting
similar language in the Equal Access to Justice Act, 28 U.S.C.
sec. 2412 (1988)); see also Ekman v. Commissioner, 184 F.3d 522,
526 (6th Cir. 1999); Maggie Management Co. v. Commissioner, 108
T.C. 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 he
knew or should have known at the time. See Rutana v.
Commissioner, 88 T.C. 1329, 1334 (1987); DeVenney v.
Commissioner, 85 T.C. 927, 930 (1985). 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). Respondent's position may be incorrect but
substantially justified if a reasonable person could think it
correct. See Pierce v. Underwood, supra at 566 n.2.
"The fact that the Commissioner eventually loses or concedes
a case does not by itself establish that the position taken is
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