Michael O'Keefe Sowell - Page 7

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               Accordingly, the threshold issue is whether the position of            
          the United States in the proceeding was substantially justified.            
          Sec. 7430(c)(4)(A) and (B).  The parties agree that, under                  
          section 7430, the burden of proof rests with respondent to                  
          establish that respondent’s position was substantially justified.           
               To determine whether respondent has met this burden, the               
          Court must first identify the point in time at which the United             
          States is considered to have taken a position and then decide               
          whether the position taken from that point forward was                      
          substantially justified.  The “not substantially justified”                 
          standard is applied as of the separate dates that respondent took           
          a position in the administrative proceeding as distinguished from           
          the proceeding in this Court.  Sec. 7430(c)(7)(A) and (B); Han v.           
          Commissioner, T.C. Memo. 1993-386.                                          
               With respect to a claim for reasonable administrative costs,           
          the position of the United States means the position taken by the           
          United States in any administrative proceeding to which section             
          7430 applies as of the earlier of (1) the date of the receipt by            
          the taxpayer of the decision of the IRS Appeals Office, or (2)              
          the date of the notice of deficiency.  Sec. 7430(c)(7)(B).  In              
          this case, petitioner did not take an administrative appeal.  No            
          notice of decision of the IRS Appeals Office was issued or                  
          received by petitioner prior to the date of the notice of                   
          deficiency.  Therefore, for purposes of the administrative                  

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