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3. Be an individual whose net worth did not exceed $2
million when the petition was filed. Sec. 7430(c)(4)(A)(ii); 28
U.S.C. sec. 2412(d)(2)(B) (1988). Respondent concedes that
petitioner meets this requirement.
4. Not unreasonably protract the proceedings. Sec.
7430(b)(3). Respondent concedes that petitioner meets this
requirement.
5. Establish that the amounts of costs and attorney’s fees
claimed are reasonable. Sec. 7430(a), (c)(1). Respondent
concedes that the amounts petitioner claimed are reasonable.
In addition, the taxpayer is not entitled to an award for
reasonable litigation costs if the Commissioner shows that the
position of the United States in the proceeding was substantially
justified. Sec. 7430(c)(4)(B)(i).
B. Whether Respondent’s Position Was Substantially Justified
The parties dispute whether respondent’s position in the
underlying proceeding was substantially justified.
The Commissioner’s position is substantially justified if
that position could satisfy a reasonable person. Pierce v.
Underwood, 487 U.S. 552, 565 (1988). To be substantially
justified, the Commissioner’s position must have a reasonable
basis in both law and fact. Id.; Hanover Bldg. Matls., Inc. v.
Guiffrida, 748 F.2d 1011, 1015 (5th Cir. 1984); Powers v.
Commissioner, 100 T.C. 457, 470, 473 (1993), affd. on this issue,
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