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decide whether respondent’s position relating to the valuation
issue was substantially justified, and whether costs relating to
the FLP issue are reasonable.
I. Substantial Justification
We may award costs to petitioners where respondent’s
position was not substantially justified (i.e., did not have a
reasonable basis in law and fact). See Pierce v. Underwood, 487
U.S. 552, 565 (1988). In addition, the justification for each of
respondent’s positions must be independently determined. See
Swanson v. Commissioner, 106 T.C. 76, 92, 97 (1996). This Court
will determine the reasonableness of respondent’s position as to
each issue independently and apportion the requested award
between those issues for which respondent was, and those issues
for which respondent was not, substantially justified. See id.
at 87-92; Salopek v. Commissioner, T.C. Memo. 1998-385, affd.
without published opinion 210 F.3d 390 (10th Cir. 2000). The
fact that respondent loses an issue is not determinative of the
reasonableness of respondent’s position. Wasie v. Commissioner,
86 T.C. 962, 969 (1986).
To establish that respondent was substantially justified on
the valuation issue, respondent must establish that he was
reasonable in adopting his expert’s analysis. See Smith v.
United States, 850 F.2d 242, 246 (5th Cir. 1988); see also Fair
v. Commissioner, T.C. Memo. 1994-602 (holding that when deciding
if respondent’s position on valuation is substantially justified,
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