- 8 -
law. Norgaard v. Commissioner, 939 F.2d 874, 881 (9th cir.
1991), affg. in part and revg. in part T.C. Memo. 1989-390;
Maggie Mgmt. Co. v. Commissioner, 108 T.C. 440, 443 (1997).
Although the Commissioner’s litigating position may have been
incorrect in hindsight,5 it is substantially justified “if a
reasonable person could think it correct”. Pierce v. Underwood,
supra at 566 n.2. “Thus, whether respondent acted reasonably in
the instant case ultimately turns upon those available facts
which formed the basis for the position taken in the notice of
deficiency and during the litigation, as well as upon any legal
precedents related to the case.” Maggie Mgmt. Co. v.
Commissioner, supra at 443.
When a taxpayer seeks an award of litigation costs under
section 7430, we look at the Commissioner’s answer to ascertain
his initial litigating position, and we must decide whether the
Commissioner’s position was reasonable by examining the facts
reasonably available to the Commissioner at the time he asserted
his position in his answer. Maggie Mgmt. Co. v. Commissioner,
supra at 443; DeVenney v. Commissioner, 85 T.C. 927, 930 (1985).
In Tinnell I, respondent’s litigating position with respect to
5The fact that the Commissioner eventually loses a case does
not by itself establish that the Commissioner’s position was
unreasonable, but the litigating result is a factor that may be
considered. See Anthony v. United States, 987 F.2d 670, 674
(10th Cir. 1993); Estate of Perry v. Commissioner, 931 F.2d 1044,
1046 (5th Cir. 1991); Sokol v. Commissioner, 92 T.C. 760, 767
(1989).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011