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C. Substantial Justification
A position of the United States in a judicial proceeding is
substantially justified if it has a reasonable basis in law and
fact. E.g., Maggie Mgmt. Co. v. Commissioner, supra at 443. We
determine the reasonableness of respondent’s position in this
case based upon the facts available to respondent at the time he
took the position (i.e., at the time of the filing of the answer)
and the controlling legal precedent at such time. Id. The fact
that respondent conceded the fraud issue does not, by itself,
establish that his position with respect thereto was
unreasonable. Id. However, it is a factor that may be
considered. Id.
II. Application of the “Substantially Justified” Standard
A. General Considerations
Section 6663(a) imposes a 75-percent penalty with respect to
any portion of an underpayment of tax that is attributable to
fraud. Respondent bears the burden of proving fraud by clear and
convincing evidence. Rule 142(b). In the case of a joint
5(...continued)
substantially justified. Because the accuracy-related penalty is
mentioned in only three of the time entries submitted by
petitioner’s counsel (none of which establishes the amount of
time devoted solely to that issue), we do not think that a
separate analysis of respondent’s substantial justification for
each of his alternative positions would be fruitful. We
therefore do not address the procedural ramifications, if any, of
petitioner’s failure to make her claim with respect to
respondent’s alternative position in the motion.
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