Linda A. Fields - Page 12




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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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