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liabilities owed by petitioner after application of section
6015(c) and (d) and would have confirmed that petitioner
qualified for section 6015(c) relief.14 If respondent had then
conceded that petitioner was entitled to section 6015(c) relief
in the notice of determination or in his answer, the concession
would have enabled the parties to settle this case at a much
earlier date.15
3. Conclusion
We hold that respondent’s litigating position was not
reasonable under the circumstances and that, therefore, it was
not substantially justified. Because respondent’s administrative
and litigating positions were not substantially justified, we
14Although respondent’s calculation would not have arrived
at the same tax liability numbers as those reflected in the
settlement because of respondent’s interpretation of sec.
6015(d)(3)(B), see Hopkins v. Commissioner, 121 T.C. 73 (2003),
the computation would nevertheless have confirmed that petitioner
was entitled to sec. 6015(c) relief. When our opinion in Hopkins
v. Commissioner, supra, rejecting respondent’s interpretation of
sec. 6015(d)(3)(B), was filed on July 29, 2003, respondent had
reason to know that the application of the tax benefit rule of
sec. 6015(d)(3)(B) might increase the relief available to
petitioner under sec. 6015(c). If respondent had revised his
calculation at that time (approximately 5 months after his answer
was filed), he would have arrived at the same tax liabilities as
those reflected in the settlement.
15The fact that respondent eventually conceded that
petitioner was entitled to proportionate relief under sec.
6015(c) is a factor we may consider, although it is not
determinative, in deciding whether respondent’s position was
substantially justified. Maggie Mgmt. Co. v. Commissioner, 108
T.C. 430 (1997); Powers v. Commissioner, 100 T.C. 457, 471 (1993)
affd. in part, revd. in part, and remanded in part 43 F.3d 172
(5th Cir. 1995).
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