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costs may be limited to costs attributable to the portion of the
proceeding during which the position of the IRS was not
substantially justified). The fact that respondent ultimately
concedes an issue does not, by itself, establish that his prior
position with respect to that issue was unreasonable. Maggie
Mgmt. Co. v. Commissioner, supra at 443. However, it is a factor
that may be considered. Id.
There is a rebuttable presumption of no substantial
justification if the IRS “did not follow its applicable published
guidance in the administrative proceeding.” Sec.
7430(c)(4)(B)(ii). The term “applicable published guidance” is
defined to mean “(I) regulations, revenue rulings, revenue
procedures, information releases, notices and announcements, and
(II) * * * private letter rulings, technical advice memoranda,
and determination letters [issued to the taxpayer].” Sec.
7430(c)(4)(B)(iv). Section 7430(c)(4)(B)(iii) requires that
courts “take into account whether the United States has lost in
courts of appeal[s] [sic] for other circuits on substantially
similar issues” in determining “whether the position of the
United States was substantially justified”.
II. Summary of the Parties’ Arguments
A. Petitioners’ Arguments
Petitioners make the following arguments in support of their
position:
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