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judicial proceeding to which section 7430(a) applies, sec.
7430(c)(7)(A). Respondent’s litigating position is that taken in
his answer, which was filed on May 1, 2003. See Huffman v.
Commissioner, 978 F.2d 1139, 1148 (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). Respondent’s position
in the answer was that the investment in SGE was a joint
investment, and petitioner was not entitled to relief under
section 6015(c) because she did not meet the marital status
requirement and had actual knowledge, when she signed the
returns, of any items giving rise to the deficiency that were
allocable to her spouse.
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)); Maggie Mgmt. Co. v. Commissioner, supra at
443; sec. 301.7430-5(c)(1), Proced. & Admin. Regs. The
reasonableness of the Commissioner’s position turns on the
available facts that formed the basis for the position and any
legal precedents related to the case. Maggie Mgmt. Co. v.
Commissioner, supra at 443; DeVenney v. Commissioner, 85 T.C.
927, 930-931 (1985). A significant factor in determining whether
the Commissioner’s position is substantially justified as of a
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