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considered. Powers v. Commissioner, 100 T.C. 457, 471 (1993),
affd. in part and revd. in part 43 F.3d 172 (5th Cir. 1995).
Respondent contends that petitioners are not the prevailing
party because his position is substantially justified in that he
had a reasonable basis in both fact and law.5 Petitioners argue
that they substantially prevailed with respect to the amount in
controversy, as well as with regard to the most significant
issue, whether moneys petitioners received constituted additional
income or qualified as loan proceeds.
In Rosario I, we were required to examine and interpret the
practice agreement in order to resolve the issue. We did not
have any testimonial evidence to aid in interpreting the practice
agreement because the parties submitted the case fully
stipulated. Although we ultimately held for petitioners, our
holding was not easily reached.
The relevant language in the practice agreement regarding
the guarantee payments was not clear. The agreement provided, in
part:
To the extent that Physician’s gross income in any
month during the term of this Agreement is less than
$33,334.00, the Hospital will pay Physician by the
tenth day of the closing of the Physician’s books for
that month any amount sufficient to raise Physician’s
income for that month to $33,334.00 (such payment by
5 Respondent alternatively argues that the amounts of costs
claimed by petitioners are unreasonable. Because we find that
respondent’s position was substantially justified, we need not
reach respondent’s alternative argument.
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