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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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