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revd. in part and remanded on other issues 43 F.3d 172 (5th Cir.
1995). For a position to be substantially justified, there must
be substantial evidence to support it. Pierce v. Underwood,
supra at 564-565; Powers v. Commissioner, supra at 473.
The Commissioner’s concession in the underlying proceeding
does not establish that a taxpayer is entitled to an award for
reasonable litigation costs. Wilfong v. United States, 991 F.2d
359, 364 (7th Cir. 1993); Hanson v. Commissioner, 975 F.2d 1150,
1153 (5th Cir. 1992). However, it is a factor to be considered.
Estate of Perry v. Commissioner, 931 F.2d 1044, 1046 (5th Cir.
1991); Powers v. Commissioner, supra at 471.
1. Whether Respondent Had a Reasonable Basis in Law
Petitioner contends that respondent did not have a
reasonable basis in law for respondent’s position that petitioner
is liable for tax on the entire $350,000 lottery payment in 1995.
We disagree.
The Commissioner has a reasonable basis in law if the
Commissioner’s position is based on relevant legal precedents.
Pierce v. Underwood, supra; Maggie Mgmt. Co. v. Commissioner, 108
T.C. 430, 443 (1997); Coastal Petroleum Refiners, Inc. v.
Commissioner, 94 T.C. 685, 688 (1990). Respondent contends that
Smith v. IRS, 75 AFTR 2d 95-2253, 94-2 USTC par. 50,503 (S.D.N.Y.
1994), provides a reasonable basis in law for respondent’s
position. The facts of Smith are similar to those in the instant
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