Jennifer L. Rusley - Page 6




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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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