Dennis and Nancy Flynn - Page 11

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          B.   Whether Respondent’s Position Was Substantially Justified              
               1.   Date of Respondent’s Position for Purposes of Applying            
                    the Substantially Justified Standard                              
               For purposes of applying the substantially justified                   
          standard, the position of the United States is the Commissioner’s           
          position as of the earlier of: (1) The date of receipt by the               
          taxpayer of the notice of decision of the Appeals Office, or (2)            
          the date of the notice of deficiency.  Sec. 7430(c)(7)(B)(ii);              
          Fla. Country Clubs, Inc. v. Commissioner, 122 T.C. 73, 77 (2004).           
          Thus, respondent’s position is the position stated in the Notice            
          of Decision dated January 13, 2000, in which respondent denied              
          petitioners’ request to abate the late payment addition for 1993,           
          1995, and 1996.                                                             
               2.   When Is the Commissioner’s Position Substantially                 
                    Justified                                                         
               The Commissioner's position is substantially justified if,             
          based on all of the facts and circumstances, the Commissioner’s             
          position has a reasonable basis in both law and fact.  Pierce v.            
          Underwood, 487 U.S. 552, 565 (1988) (construing similar language            
          in the Equal Access to Justice Act, 5 U.S.C. sec. 504 (2000));              
          Powers v. Commissioner, 100 T.C. 457, 470, 473 (1993), affd. on             
          this issue, revd. in part and remanded on other issues 43 F.3d              
          172 (5th Cir. 1995).  For a position to be substantially                    
          justified, there must be substantial evidence to support it.                
          Pierce v. Underwood, supra at 564-565; Powers v. Commissioner,              






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