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protract the administrative proceeding; and (3) the
administrative costs are reasonable. Sec. 7430(a), (c)(4),
(b)(3), (c)(2). A taxpayer is the prevailing party only if: (1)
The taxpayer substantially prevailed with respect to the amount
in controversy or as to the most significant issue or set of
issues presented; (2) the taxpayer satisfies the applicable net
worth requirement; and (3) the position of the United States in
the proceeding is not substantially justified. Sec.
7430(c)(4)(A) and (B).
In this case, we first address the question, whether the
position of the United States was substantially justified,
because the other issues need not be considered if respondent has
established that his position in the administrative proceedings
was substantially justified.
Whether the position of the United States was substantially
justified turns on a finding of reasonableness, based upon all
the facts and circumstances, as well as the legal precedents
relating to the case. Pierce v. Underwood, 487 U.S. 552, 565
(1988). In deciding whether the Commissioner acted reasonably,
this Court must “‘consider the basis for the Commissioner’s legal
position and the manner in which the position was maintained’”.
Corkrey v. Commissioner, 115 T.C. 366, 373 (2000) (quoting Wasie
v. Commissioner, 86 T.C. 962, 969 (1986)). The fact that the
Commissioner concedes a case is not determinative of the
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