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the taxpayer must meet the net worth requirements of 28 U.S.C.
sec. 2412(d)(2)(B) (2000). Sec. 7430(c)(4)(A). A taxpayer,
however, will not be treated as the prevailing party if the
Commissioner establishes that the Commissioner’s position was
substantially justified. Sec. 7430(c)(4)(B). For purposes of
the administrative proceedings, respondent’s position is that
which was articulated in the notice of deficiency. Sec.
7430(c)(7)(B); Huffman v. Commissioner, 978 F.2d 1139, 1143-1147
(9th Cir. 1992), affg. in part and revg. in part T.C. Memo. 1991-
144; Maggie Mgmt. Co. v. Commissioner, 108 T.C. 430, 442 (1997).
For purposes of the court proceedings, respondent’s position is
that which was set forth in the answer. Sec. 7430(c)(7)(A);
Huffman v. Commissioner, supra at 1147-1148; Maggie Mgmt. Co. v.
Commissioner, supra at 442.
The substantially justified standard is “essentially a
continuation of the prior law’s reasonableness standard.”
Swanson v. Commissioner, 106 T.C. 76, 86 (1996). A position is
substantially justified if it is justified to a degree that could
satisfy a reasonable person and has a reasonable basis in both
fact and law. Pierce v. Underwood, 487 U.S. 552, 565 (1988);4
4 Although the dispute in Pierce v. Underwood, 487 U.S. 552
(1988), arose under the provisions of the Equal Access to Justice
Act (EAJA), 28 U.S.C. sec. 2412(d) (1994), the relevant
provisions of the EAJA are almost identical to the language of
sec. 7430. Cozean v. Commissioner, 109 T.C. 227, 232 n.9 (1997).
We, therefore, consider the holding in Pierce v. Underwood,
(continued...)
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