Gabino Diaz - Page 5
prevailing party; (2) exhausted available administrative
remedies; and (3) did not unreasonably protract the court
proceedings. Sec. 7430(a) and (b)(1), (3).
Under section 7430(c)(4)(A), a “prevailing party” is defined
as a party who has substantially prevailed with respect to the
amount in controversy or who has substantially prevailed with
respect to the most significant issue or set of issues and who
meets certain net worth requirements. Sec. 7430(c)(4)(A). If
respondent establishes that respondent’s position in the
proceeding was substantially justified, the taxpayer will not be
treated as a prevailing party. Sec. 7430(c)(4)(B). Whether
respondent’s position was substantially justified depends on
whether his position was supported by a reasonable basis in law
and fact. Pierce v. Underwood, 487 U.S. 552 (1988); Rickel v.
Commissioner, 900 F.2d 655, 665 (3d Cir. 1990), affg. in part and
revg. in part on other grounds 92 T.C. 510 (1989).
The fact that respondent eventually loses or concedes an
issue or issues does not by itself establish that respondent’s
position was unreasonable. Maggie Mgmt. Co. v. Commissioner, 108
T.C. 430, 443 (1997).
Whether respondent acted reasonably turns largely on the
basis of the available information used to form respondent’s
position and whether respondent knew or should have known that
his position was invalid at the time respondent took the position
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Last modified: November 10, 2007