Robert Lloyd - Page 9




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               However, the taxpayer fails to qualify as the prevailing                 
          party if the Commissioner establishes that his position was                   
          substantially justified.  See sec. 7430(c)(4)(B)(i).  Respondent              
          bears the burden of proving that respondent’s position was                    
          substantially justified.  See id.                                             
               After concessions by respondent,2 the issues for decision                
          are:  (1) Whether respondent’s positions were substantially                   
          justified; (2) whether petitioner exhausted his administrative                
          remedies for the 1993 and 1994 tax years; and (3) whether the                 
          amount of costs and attorney’s fees claimed by petitioner are                 
          reasonable.                                                                   
          A.  1992 Tax Year                                                             
               Because of the concessions made by respondent, the sole                  
          issue for determination for the tax year 1992 is whether                      
          respondent’s position was substantially justified.                            
               For purposes of an award of litigation costs, the position               
          of the United States is the position taken by the United States               
          in a judicial proceeding.  See sec. 7430(c)(7)(A).  The United                
          States took a position in these judicial proceedings when it                  
          filed an answer to the petition.  See Huffman v. Commissioner,                
          978 F.2d 1139, 1148 (9th Cir. 1992), affg. in part, revg. in part             


          2    Respondent concedes that petitioner has:  (1) Substantially              
          prevailed in the proceedings; (2) satisfied the net worth                     
          requirements; and (3) not unreasonably protracted the Court                   
          proceedings.  Respondent also concedes that petitioner exhausted              
          his administrative remedies with regard to 1992.                              





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