Ted and Tammy Estes - Page 9

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          substantially justified, however, a taxpayer is not a “prevailing           
          party” for purposes of section 7430.  See sec. 7430(c)(4)(B).4              
               After concessions by respondent, the remaining issues are:             
          (1) Whether the position of the United States in the proceeding             
          was substantially justified, and (2) 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 argument that the administrative and litigation costs           
          requested by petitioners are not reasonable.                                
               The 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).              
          For purposes of administrative costs, the position of the United            
          States is that taken in an administrative proceeding as of the              
          earlier of the date of the receipt by the taxpayer of the notice            
          of decision by the Internal Revenue Service Office of Appeals or            
          the date of the notice of deficiency.  See sec. 7430(c)(7)(B).              
          The position of the United States for purposes of litigation                
          costs refers to the position of the United States in a judicial             

          4  Because the petition in this case was filed after July                   
          30, 1996, under sec. 7430 the burden is on respondent to show               
          that the Government’s position was substantially justified.  See            
          Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 701(d), 110                
          Stat. 1452, 1464 (1996); Maggie Management Co. v. Commissioner,             
          108 T.C. 430, 438 (1997).                                                   

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