Richard Scott Gehrs - Page 9

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          satisfy a reasonable person”.  Pierce v. Underwood, supra at 565            
          (construing similar language in the Equal Access to Justice Act,            
          28 U.S.C. sec. 2412 (1988)).  Thus, the Commissioner’s position             
          may be incorrect but nevertheless be substantially justified “‘if           
          a reasonable person could think it correct’”.  Maggie Mgmt. Co.             
          v. Commissioner, 108 T.C. 430, 443 (1997) (quoting Pierce v.                
          Underwood, supra at 566 n.2).                                               
              The relevant inquiry is “whether * * * [the Commissioner]              
          knew or should have known that * * * [his] position was invalid             
          at the onset”.  Nalle v. Commissioner, 55 F.3d 189, 191 (5th Cir.           
          1995), affg. T.C. Memo. 1994-182.  We look to whether the                   
          Commissioner’s position was reasonable, in light of and subject             
          to the available facts and circumstances at the time that the               
          Commissioner took his position.  Maggie Mgmt. Co. v.                        
          Commissioner, supra at 443; DeVenney v. Commissioner, 85 T.C.               
          927, 930 (1985).                                                            
               The fact that the Commissioner eventually concedes, or even            
          loses, a case does not establish that his position was                      
          unreasonable.  Estate of Perry v. Commissioner, 931 F.2d 1044,              
          1046 (5th Cir. 1991); Sokol v. Commissioner, 92 T.C. 760, 767               
          (1989).  However, the Commissioner’s concession remains a factor            
          to be considered.  Powers v. Commissioner, 100 T.C. 457, 471                
          (1993), affd. in part, revd. in part and remanded on another                
          issue 43 F.3d 172 (5th Cir. 1995).                                          






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