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petitioner meets the net worth requirement. Section
7430(c)(4)(B), however, provides that a taxpayer shall not be
treated as the prevailing party if the United States establishes
that the position of the United States in the proceeding was
substantially justified.
Respondent contends that petitioner is not the prevailing
party within the meaning of section 7430(c)(4) because
respondent’s position was substantially justified prior to
December 9, 2004, on which date petitioner faxed to respondent
copies of documents sufficient to establish petitioner’s
position. Within a little over a month thereafter, the parties
filed a stipulation that resolved all issues in petitioner’s
favor. Respondent’s position was substantially justified if,
based on all the facts and circumstances and legal precedents
related to the case, respondent acted reasonably. Pierce v.
Underwood, 487 U.S. 552 (1988); Sher v. Commissioner, 89 T.C. 79,
84 (1987), affd. 861 F.2d 131 (5th Cir. 1988). We must examine
whether respondent’ position was reasonable given the available
facts and circumstances at the time respondent took his position.
Maggie Mgmt. Co. v. Commissioner, 108 T.C. 430, 443 (1997).
A significant factor in determining whether the position of
the Internal Revenue Service was substantially justified as of a
given date is whether, on or before that date, the taxpayer
presented all relevant information under the taxpayer’s control
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Last modified: May 25, 2011