- 27 -
7430(c)(4)(A)(ii).” Id.; see also id. n.27. As respondent has
forgone the opportunity provided in our May 10 and June 14, 2006
orders to challenge that (or any other) aspect of Dixon VII, we
shall again look to the real parties in interest to determine the
extent to which the requested amounts were paid or incurred. See
infra Part III.H.
C. Substantial Justification Defense
Under section 7430(c)(4)(B)(i), it is “the position of the
United States in the proceeding” that is evaluated under the
substantial justification standard. In Dixon VII, we identified
that position as “respondent’s litigating position regarding the
legal effect of the attorney misconduct (i.e., that such
misconduct amounted to harmless error and therefore did not
invalidate the decisions entered against the test case
petitioners following the issuance of Dixon II).” Dixon v.
Commissioner, T.C. Memo. 2006-97 at Part II.C.1. We then
concluded, although we had adopted that very position in Dixon
III, that the finding of the Court of Appeals in Dixon V that we
had committed clear error in that regard compelled the conclusion
that respondent’s position was not substantially justified. As
respondent has declined our invitation to challenge that aspect
of Dixon VII, we similarly conclude here that the position of the
United States, as so identified, was not substantially justified.
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