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customers.” The third letter does not establish that petitioner
performed all or substantially all her services off the premises
of her employer and does not explain whether petitioner was paid
by salary or commission or some combination of the two. The
letter says nothing about the extent and nature of supervision of
petitioner in her work for Arch Wireless. The third letter
simply does not establish whether petitioner was a common law
employee or was a statutory employee during 1998.
We conclude that respondent had a reasonable basis in fact
and law for the position taken in the notice of deficiency. At
the time of the issuance of the notice of deficiency, petitioner
had not established her status as a statutory employee entitling
her to report her business expense deductions on Schedule C. The
fourth letter that petitioner ultimately presented to respondent
confirmed the details that formed the basis of respondent’s
concession to settle this matter. Petitioner did not present the
fourth letter until after respondent issued the notice of
deficiency. Therefore, under the circumstances of this case
respondent’s position was substantially justified. Petitioner is
not the prevailing party under section 7430 and is not entitled
to an award of administrative costs.
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