Gary Gealer - Page 8

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          relating to the case.  Pierce v. Underwood, 487 U.S. 552, 565               
          (1988); Swanson v. Commissioner, 106 T.C. 76, 86 (1996).  A                 
          position is substantially justified if the position is "justified           
          to a degree that could satisfy a reasonable person."  Pierce v.             
          Underwood, supra at 565.  The 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).           
          Deciding whether the Commissioner’s position and conduct were               
          reasonable necessarily requires considering the facts available             
          to the Commissioner at that time.  Coastal Petroleum Refiners,              
          Inc. v. Commissioner, 94 T.C. 685, 689 (1990); DeVenney v.                  
          Commissioner, 85 T.C. 927, 930 (1985).  The fact that the                   
          Commissioner eventually loses or concedes a case does not                   
          establish an unreasonable position.  Sokol v. Commissioner, 92              
          T.C. 760, 767 (1989).                                                       
               Respondent's position in the notice of deficiency and in the           
          answer was that The Fourth Dreamer had unsubstantiated                      
          expenditures which, because they were not proven to be ordinary             
          and necessary business expenses, inured to the benefit of the two           
          shareholders of record in 1995, one of whom was petitioner.                 
          Petitioner claims that, to have been substantially justified in             
          his position, respondent must have been able to prove that                  
          petitioner actually received benefits which were constructive               
          dividends from The Fourth Dreamer.                                          

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