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reasonableness of the Commissioner’s position. See Sokol v.
Commissioner, 92 T.C. 760, 767 (1989); Wasie v. Commissioner,
supra. It is, however, “a relevant factor to consider in
deciding the degree of the Commissioner’s justification.”
Corkrey v. Commissioner, supra at 373.
We review the Commissioner’s position as of the earlier of
the date of the receipt by the taxpayer of the notice of decision
by the Office of Appeals or the date of the notice of deficiency
to determine whether respondent was substantially justified with
respect to the recovery of administrative costs. Sec.
7430(c)(7)(B). Therefore, in the present case the relevant
inquiry, with respect to the recovery of the administrative
costs, is whether respondent had a reasonable basis for his
position disallowing petitioner’s Schedule C expense deductions
at the time of the issuance of the notice of deficiency (February
20, 2001).
An individual’s adjusted gross income (AGI) is an
individual’s gross income less specified deductions, including
allowable deductions attributable to a trade or business carried
on by the taxpayer, if such trade or business does not consist of
the performance of services by the taxpayer as an employee. Sec.
62. Generally, miscellaneous itemized deductions, including
business expenses under section 162, are deductible from an
individual’s AGI only to the extent that the aggregate of those
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