-15-
Petitioners must establish all of the above requirements
before the Court may award litigation and administrative costs
under section 7430. Minahan v. Commissioner, 88 T.C. 492, 497
(1987); Han v. Commissioner, T.C. Memo. 1993-386. Petitioners have
the burden of proof with respect to each and every requirement.
Rule 232(e); Welch v. Helvering, 290 U.S. 111, 115 (1933); Gantner
v. Commissioner, 92 T.C. 192, 197 (1989), affd. 905 F.2d 241 (8th
Cir. 1990).
The "not substantially justified" standard under section 7430
is applied as of the separate dates that respondent took positions
in the administrative proceeding and the proceeding in this Court.
Sec. 7430(c)(7)(A) and (B); Huffman v. Commissioner, supra; Han v.
Commissioner, supra. For purposes of the administrative
proceeding, respondent took a position on March 11, 1994, the date
of the notice of deficiency. Sec. 7430(c)(7)(B). For purposes of
the proceeding in this Court, respondent took a position on July
22, 1994, the date respondent filed the answer. See Huffman v.
Commissioner, supra at 1148. These two positions are virtually
identical; there is no evidence in the record that respondent's
position changed from the time she issued the notice of deficiency
until after the February 1995 meeting when petitioners provided
respondent with pertinent facts surrounding the transactions.
Whether or not this position was substantially justified will
determine whether petitioners are entitled to an award of
reasonable litigation and administrative costs.
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