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Tax Click here for the full text of this decision FACTS: After a jury acquitted the petitioner-appellant, Vernon Griffin, on all charges of criminal tax fraud (evasion), the respondent-appellee, Commissioner of Internal Revenue, assessed deficiencies, additions to tax and penalties against all petitioners-appellants for the tax years 1987, 1988 and 1989, the same years involved in the criminal case. The taxpayers challenged that determination in the U.S. Tax Court and ultimately prevailed. Petitioners then moved for an award of attorneys’ fees and costs pursuant to 26 U.S.C. sec. 7430 and Tax Court Rule of Practice and Procedure 231. The Tax Court denied that motion, and it is that denial that the taxpayers appeal. The taxpayers in this case appeal a Tax Court order filed Aug. 27, 2002, denying them an award of litigation fees and costs. In that ruling , the Tax Court held that the government’s litigation position in the underlying civil case was “substantially justified,” which shields the commissioner from liability for fees and costs under I.R.C. sec. 7430(c)(4)(B)(i). The underlying litigation related to taxes paid in 1987, 1988 and 1989 by Terrell Equipment Co. (TECO), Mr. Griffin and Mrs. Griffin. The commissioner had determined deficiencies, additions to tax and penalties for all petitioners for the years in question. In the ensuing civil litigation, the commissioner conceded that the period of limitations had expired absent a finding of fraud. The Tax Court found that none of the taxpayers had acted fraudulently and, therefore, were not liable for any of the amounts determined by the commissioner. After that decision, the taxpayers made a motion for award of fees and costs, and it is the denial of that award that they appeal. HOLDING: Affirmed. None of the taxpayers appeal decisionsof the Tax Court, as its decisionsdiscuss only the merits of the underlying civil tax fraud case, and were favorable to petitioners. Rather, petitioners appeal only the Tax Court’s order dated Aug. 27, 2002, which denies all of them an award of fees and costs. In other words, as regards the denial of fees and costs, there is no “decision” to appeal, only the lone Aug. 27 order, which covers allpetitioners and was timely appealed by TECO and Mr. Griffin. This case is therefore distinguishable from Twenty Mile Joint Venture and Davies. As the Order being appealed affected all petitioners, and TECO and Mr. Griffin’s appeal was a “timely notice of appeal . . . filed by one party” as described by sec. 7483, Mrs. Griffin was entitled to 120 days within which to file her own appeal. She filed her notice of appeal within that extended period, so the court has jurisdiction over her appeal. Petitioners argue that the commissioner’s litigation position was not substantially justified because he allegedly attempted to prove fraud based only on understatement of income, which is contrary to established case law of this circuit. Essentially, petitioners argue that the commissioner was aware of this case law, disagreed with it, tried to change it by pursuing the instant litigation, failed, and should therefore be held liable for fees and costs. The commissioner responds that his litigation strategy at trial was grounded on many more indicators or “badges” of fraud than understatement of income alone, that the Tax Court’s findings on this issue are amply supported, and that the court should therefore affirm the Tax Court’s denial of fees and costs. The court agrees with the commissioner. The Tax Court found that the commissioner “went to trial on the basis of the theory that multiple badges of fraud existed, and at trial he attempted to prove that multiple badges of fraud were present.” Although the commissioner concedes he argued that understatement of income alone might be enough to prove fraud in this circuit, he asserts that this was a secondary, alternative argument, an assessment with which the Tax Court agreed. More importantly, the Tax Court listed thirty stipulations of fact that it decided could have supported a finding of fraud. Even though all of these stipulations relate in some way to understatement of income, many could have supported affirmative findings on other “badges” of fraud. The government’s position is substantially justified if it is ” ‘justified in substance or in the main’ � that is, justified to a degree that could satisfy a reasonable person. That is no different from [a] ‘reasonable basis both in law and fact’ formulation.” Pierce v. Underwood, 487 U.S. 552 (1988). This case presents a close question: Even if, on a plenary review, the court would reach a result opposite the conclusion of the Tax Court, the court would � and does � affirm that court under the deferential abuse of discretion standard that is applicable in this appeal. The petitioners’ argument depends on the proposition that the commissioner went to trial on a theory that fraud could be proven based on nothing more than understatement of income. In the explication of its exercise of discretion, the Tax Court notes numerous stipulated facts that it concludes could support its determination that the government’s litigation position was based on a theory of multiple badges of fraud, and that such a theory was “justified to a degree that could satisfy a reasonable person.” Given the stipulations that the Tax Court relied on and the inferences that can be drawn from them, the court cannot say that the Tax Court’s denial of fees and costs under sec. 7430 was an abuse of discretion. OPINION: Wiener, J.; Wiener, Clement and Prado, JJ.

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