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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 (construing similar language in
the Equal Access to Justice Act). The Commissioner’s position
may be incorrect but nevertheless be substantially justified “‘if
a reasonable person could think it correct.’” Maggie Management
Co. v. Commissioner, 108 T.C. 430, 443 (1997) (quoting Pierce v.
Underwood, supra at 566 n.2).
The fact that the Commissioner eventually loses or concedes
a case does not establish that his position was unreasonable.
See Wilfong v. United States, 991 F.2d 359, 364 (7th Cir. 1993);
Hanson v. Commissioner, 975 F.2d 1150, 1153 (5th Cir. 1992);
Estate of Perry v. Commissioner, 931 F.2d 1044, 1046 (5th Cir.
1991); Sokol v. Commissioner, 92 T.C. 760, 767 (1989). However,
it does remain a factor to be considered. See Estate of Perry v.
Commissioner, supra; Powers v. Commissioner, 100 T.C. 457, 471
(1993), affd. in part, revd. in part and remanded on another
issue 43 F.3d 172 (5th Cir. 1995).
As relevant herein, we review the Commissioner’s position as
of the date of the notice of deficiency to determine whether he
was substantially justified with respect to the recovery of
administrative costs. See sec. 7430(c)(7)(B). We examine the
Commissioner’s position in his answer to the petition to
determine whether he was substantially justified with respect to
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