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requirement. We need not decide this issue because we conclude
that respondent's position was substantially justified.
A taxpayer has the burden of proving that it meets each
requirement before the Court may order an award of administrative
and litigation costs under section 7430. Rule 232(e); Estate of
Johnson v. Commissioner, 985 F.2d 1315, 1318 (5th Cir. 1993);
Gantner v. Commissioner, 92 T.C. 192, 197 (1989), affd. 905 F.2d
241 (8th Cir. 1990).
A taxpayer must establish that the position of the United
States in the litigation was not substantially justified to be
entitled to an award for administrative or litigation costs.
Sec. 7430(c)(4)(A)(i). The position of the United States is the
position taken by respondent: (a) In the judicial proceeding,
and (b) in the administrative proceeding as of the earlier of,
(i) the date the taxpayer receives the notice of the decision
of the Internal Revenue Service Office of Appeals, or (ii) the
date of the notice of deficiency. Sec. 7430(c)(7). Here,
respondent's position in the notice of deficiency, the answer,
throughout trial, and posttrial briefs, was that petitioner paid
unreasonable compensation to its officers. Thus, respondent's
position in both the judicial and the administrative proceeding
was that taken in the notice of deficiency.
2. Whether Respondent's Position That Petitioner Paid
Unreasonable Compensation to its Officers Was Substantially
Justified
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