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notices of deficiency was substantially justified. We also
believe that the factual circumstances of this case, the newness
of the statute, and the relevant legal precedents all support a
finding that respondent had a reasonable basis for his position
and was substantially justified in not granting petitioner
equitable relief for the additions to tax and penalties.
II. Conclusion
The underlying case, Rowe I, involved the application of
section 6015, a new statute with complex and novel interpretive
issues. See Livingston v. Commissioner, T.C. Memo. 2000-387.
During the period the parties were engaged in this litigation,
relatively few cases had been decided under section 6015, and the
caselaw in this area is still developing. In deciding the
underlying case, we were forced to examine the legislative
history of the new statute and the limited caselaw in the area.
In some instances, we were faced with issues which this Court had
not squarely addressed. We also note that our holdings that
petitioner was entitled to relief from joint and several
liability for the remaining omitted income and erroneous
deduction items, penalties, and additions to tax were based in
large part on the testimony of petitioner, which we found to be
credible. The determination of credibility was vital to
petitioner’s being granted relief under section 6015, and
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