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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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