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For purposes of deciding a motion for reasonable litigation
costs, section 7430(c)(7)(A) defines the Commissioner’s
“position” as the position taken in the court proceeding. In the
present case, respondent took a position when respondent filed an
answer to petitioners’ petition. See Huffman v. Commissioner,
978 F.2d 1139, 1149 (9th Cir. 1992), affg. in part, revg. in part
and remanding T.C. Memo. 1991-144; Maggie Mgmt. Co. v.
Commissioner, 108 T.C. 430, 442 (1997).
The Commissioner’s position is substantially justified if it
has a reasonable basis in both fact and law and is justified to a
degree that could satisfy a reasonable person. Huffman v.
Commissioner, supra at 1147 n.8 (citing Pierce v. Underwood, 487
U.S. 552, 565 (1988)); Rosario v. Commissioner, T.C. Memo. 2002-
247; sec. 301.7430-5(c)(1), Proced. & Admin. Regs. In deciding
whether the Commissioner’s position was substantially justified,
a significant factor is whether, on or before the date the
Commissioner assumed the position, the taxpayer provided “all
relevant information under the taxpayer’s control and relevant
legal arguments supporting the taxpayer’s position to the
appropriate Internal Revenue Service personnel.”2 Sec. 301.7430-
2“Appropriate Internal Revenue Service personnel” are those
employees who are reviewing the taxpayer’s information or
arguments, or employees who, in the normal course of procedure
and administration, would transfer the information or arguments
to the reviewing employees. Sec. 301.7430-5(c)(1), Proced. &
Admin. Regs.
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Last modified: May 25, 2011