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underlying litigation with regard to respondent’s deficiency
determinations and fraud additions to tax. Sec. 7430(a), (b)(1),
and (c)(4).
Respondent contends, however, that because his position was
substantially justified petitioner does not qualify as a
prevailing party, that petitioner unreasonably protracted the
proceedings, that petitioner does not satisfy the net worth
requirements of 28 U.S.C. sec. 2412(d)(2)(B), and that the
litigation costs petitioner seeks are not reasonable. Sec.
7430(a), (b), and (c)(4); Foothill Ranch Co. Pship. v.
Commissioner, 110 T.C. 94, 97 (1998).
Respondent correctly notes that petitioner’s success on
appeal does not establish that respondent’s position herein was
not substantially justified. E.g., Nalle v. Commissioner, 55
F.3d 189, 192 (5th Cir. 1995), affg. T.C. Memo. 1994-182; Lennox
v. Commissioner, 998 F.2d 244, 248 (5th Cir. 1993), revg. in part
and remanding T.C. Memo. 1992-382.
The test of whether respondent’s position was substantially
justified is essentially one of reasonableness in law and fact.
E.g., Pierce v. Underwood, 487 U.S. 552, 563-564 (1988); Nalle v.
Commissioner, supra at 191. The term "substantially justified"
means justified to a degree that could satisfy a reasonable
person. E.g., Pierce v. Underwood, supra at 565; Nalle v.
Commissioner, supra.
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