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reasonable basis in law and fact). Sec. 7430(c)(4)(B); see
Pierce v. Underwood, 487 U.S. 552, 565 (1988). Respondent
concedes that petitioners have substantially prevailed with
respect to the amount in controversy but contends that his
position was substantially justified.
Respondent’s position on the date he issued the notices of
deficiency and after filing his answers with this Court is
relevant in determining whether respondent was substantially
justified. Grant v. Commissioner, 103 F.3d 948, 952 (11th Cir.
1996), affg. T.C. Memo. 1995-374. The fact that respondent loses
an issue is not determinative of the reasonableness of his
position. Wasie v. Commissioner, 86 T.C. 962, 969 (1986).
On the date respondent issued the notices of deficiency and
after filing his answers, respondent maintained the position that
David failed to report income he received from his parents and
Ms. Hinkle. Indeed, David’s bank statements, relating to the
years in issue, delineated numerous deposits that were not
included in his gross income. Thus, respondent’s position, which
was based upon the information available to him at the time he
took a position in the administrative and judicial proceedings,
was substantially justified and reasonable. The fact that
petitioners established at trial that the transfers from David’s
parents and Ms. Hinkle were gifts and loans to David and his
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