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We find respondent's arguments unpersuasive. For the
reasons set forth below, we shall grant petitioner's motion for
award of reasonable litigation and administrative costs.
Position of the United States
The Commissioner takes a position in an administrative
proceeding as of the earlier of the date the taxpayer receives an
Internal Revenue Service (IRS) Appeals decision or the date of
the notice of deficiency. Sec. 7430(c)(7)(B). Respondent's
position in the administrative proceeding was first established
with the issuance of the notice of deficiency, dated August 30,
1996.4
The position taken by the United States, for purposes of
litigation costs, is the position of the United States in a
judicial proceeding. Sec. 7430(c)(7)(A). Respondent took a
position in the judicial proceeding herein on the date
respondent's answer was filed--January 13, 1997. See Huffman v.
Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992), affg. in part
and revg. in part T.C. Memo. 1991-144.
Substantial Justification
The Commissioner's position is substantially justified if
that position could satisfy a reasonable person and if it has a
4 Petitioner incorrectly asserts that Nov. 1, 1995, is
the "Administrative Proceeding Date." This is immaterial,
however, as petitioner does not seek fees for services rendered
prior to Oct. 23, 1996.
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