Gary Gealer - Page 11

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          has evidence which is not favorable to him.  Recklitis v.                   
          Commissioner, 91 T.C. 874, 890 (1988); Wichita Terminal Elevator            
          Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513           
          (10th Cir. 1947).  We find that respondent's position was                   
          substantially justified during the time petitioner failed to                
          produce evidence to substantiate the expenditures of The Fourth             
          Dreamer.  Mills v. Commissioner, T.C. Memo. 1999-60; Cooper v.              
          Commissioner, T.C. Memo. 1999-6.                                            
               With regard to the administrative costs, we examine the                
          period beginning at the time respondent issued the notice of                
          deficiency to petitioner on February 2, 1999, the relevant date             
          in this case.  At that time respondent had not received any                 
          records from petitioner that would substantiate the business                
          expenses of The Fourth Dreamer and corroborate that petitioner              
          had no constructive dividends.  Petitioner had repeatedly refused           
          to provide respondent with the records of The Fourth Dreamer                
          since June 1997.  On April 29, 1999, petitioner began to provide            
          the requested information.  We find that respondent's position              
          throughout that period was substantially justified.                         
               With respect to the litigation costs, respondent filed his             
          answer on July 1, 1999.  Respondent agreed to concede the case on           
          January 19, 2000.  Petitioner contends that respondent had all              
          the information upon which to base a concession by April 29,                

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