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and (3) whether the amounts of administrative and litigation
costs claimed by petitioners are reasonable.
Because we hold that respondent’s position was substantially
justified, we need not consider respondent’s alternative
arguments that petitioners did not substantially prevail with
respect to the most significant issues presented and that the
administrative and litigation costs requested by petitioners are
not reasonable.
II. Substantial Justification
The “not substantially justified” standard under section
7430 is applied as of the separate dates respondent took
positions in the administrative and judicial proceedings. See
sec. 7430(c)(7). The term “position of the United States” for
purposes of administrative costs means the position taken in an
administrative proceeding as determined as of the earlier of the
date of the receipt by the taxpayer of the notice of decision by
the Internal Revenue Service (IRS) Office of Appeals or the date
of the notice of deficiency. See sec. 7430(c)(7)(B). In view of
the fact that there was no notice of decision from the IRS Office
of Appeals, we look to the date of the notice of deficiency.
The “position of the United States” for purposes of
litigation costs refers to the position of the United States in a
judicial proceeding. See sec. 7430(c)(7)(A). A judicial
proceeding in this Court is commenced with the filing of a
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