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worth requirement; and (3) the Commissioner fails to establish
that his position was substantially justified. Sec.
7430(c)(4)(A) and (B).
The parties agree that petitioner exhausted his
administrative remedies, substantially prevailed with respect to
the amount in controversy, and meets the applicable net worth
requirement. The remaining issues are: (1) Whether respondent’s
position in the administrative and court proceedings was
substantially justified; (2) whether petitioner unreasonably
protracted any portion of such proceedings; and (3) whether the
amount of administrative and litigation costs petitioner seeks is
reasonable.
Respondent bears the burden of proving that his position was
substantially justified, while petitioner bears the burden of
proof with respect to all other requirements. Sec.
7430(c)(4)(B); Rule 232(e); Maggie Mgmt. Co. v. Commissioner, 108
T.C. 430, 437 (1997).
The Supreme Court has interpreted “substantially justified”
to mean “justified to a degree that could satisfy a reasonable
person.” Pierce v. Underwood, 487 U.S. 552, 565 (1988)
(construing similar language in the Equal Access to Justice Act,
28 U.S.C. sec. 2412(d)(1)(A) (1994)). Respondent’s position need
not be correct to be substantially justified; it need only have a
“reasonable basis in law and fact.” Id. at 566 n.2. Whether
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