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fact and law. Pierce v. Underwood, 487 U.S. 552, 565 (1988);3
Huffman v. Commissioner, supra at 1147; Swanson v. Commissioner,
supra at 86. A position that merely has enough merit to avoid
sanctions for frivolousness will not satisfy this standard.
Pierce v. Underwood, supra at 566.
The determination of reasonableness is based on all of the
facts and circumstances surrounding the proceeding and the legal
precedents relating to the case. Coastal Petroleum Refiners,
Inc. v. Commissioner, 94 T.C. 685, 694-695 (1990). A position
has a reasonable basis in fact if there is such relevant evidence
as a reasonable mind might accept as adequate to support a
conclusion. Pierce v. Underwood, supra at 565. A position is
substantially justified in law if legal precedent substantially
supports the Commissioner’s position given the facts available to
the Commissioner. Coastal Petroleum Refiners, Inc. v.
Commissioner, supra at 688. Determining the reasonableness of
the Commissioner’s position and conduct requires considering what
the Commissioner knew at the time. Rutana v. Commissioner, 88
T.C. 1329, 1334 (1987); DeVenney v. Commissioner, 85 T.C. 927,
930 (1985).
3 Although the dispute in Pierce v. Underwood, 487 U.S. 552
(1988), arose under the provisions of the Equal Access to Justice
Act (EAJA), 28 U.S.C. sec. 2412(d), the relevant provisions of
the EAJA are almost identical to the language of sec. 7430.
Cozean v. Commissioner, 109 T.C. 227, 232 n.9 (1997). We,
therefore, consider the holding in Pierce v. Underwood, supra, to
be applicable to the case before us. Id.
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