Estate of John L. Baird, Deceased, Ellen B. Kirkland and J. Samuel Baird, Co-Executors - Page 8




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          justified.  If respondent’s position is found to be substantially           
          justified, then the estates’ claim for litigation costs will                
          fail.6                                                                      
          Discussion                                                                  
               Section 7430(c)(4)(A) requires that, in order to qualify for           
          recovering administrative or litigation costs, the estates must             
          be the “prevailing party” in the proceeding.  Generally, the                
          “prevailing party” is one who has substantially prevailed with              
          respect to the amount in controversy or with respect to the most            
          significant issue or set of issues presented.  Sec.                         
          7430(c)(4)(A)(i)(I) and (II).  Based on that general rule or                
          standard, the estates were the prevailing parties in these                  
          consolidated proceedings.                                                   
               A party will not be considered a prevailing party, however,            
          if the “United States establishes that the position of the United           
          States in the proceeding was substantially justified.”  Sec.                
          7430(c)(4)(B)(i).  Respondent’s position in a proceeding is                 
          “substantially justified” if it is “justified to a degree that              
          could satisfy a reasonable person” and if it has a reasonable               
          basis both in fact and law.  Pierce v. Underwood, 487 U.S. 552,             
          564-565 (1988).  The fact that respondent eventually loses or               


               6 If respondent’s position is found not to be substantially            
          justified, respondent contends, in the alternative, that the                
          amount of the estates’ claim for attorney’s fees is unreasonable            
          because it exceeds the statutory limit.                                     





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