- 5 -
per hour adjusted for inflation. Thus, the amount of costs is
not in dispute.
B. Whether the Position of the United States Was Substantially
Justified
The sole issue for decision is whether respondent's position
in this case was substantially justified. A taxpayer has the
burden of proving that he or she meets this requirement before
the Court may award administrative and litigation costs under
section 7430. Rule 232(e).2
1. Position of the United States
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). Respondent determined in the
notice of deficiency and contended in the answer that petitioners
transferred assets other than land. Thus, that is respondent's
position for both the administrative and the judicial
proceedings.
2 The provisions of the Taxpayer Bill of Rights 2, Pub. L.
104-168, sec. 701, 110 Stat. 1452, 1463-1464 (1996), which
amended sec. 7430, are effective for proceedings begun after July
30, 1996. The provisions of the Taxpayer Bill of Rights 2 do not
apply here because petitioners filed the petition in this case on
Sept. 6, 1994. See Maggie Management Co. v. Commissioner, 108
T.C. 430, 441 (1997).
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