Patricia P. Kean - Page 6

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               In the case before us, Mr. Kean made payments to Ms. Kean              
          pursuant to a series of orders from a New Jersey court, and this            
          Court applied New Jersey law in its determination as to whether             
          the disputed payments constituted alimony pursuant to section 71.           
          Ultimately, this Court distinguished the facts of Gonzales from             
          the facts of the instant case, and determined that the disputed             
          payments in the instant case were alimony.  Nonetheless, based on           
          the fact that Gonzales and the instant case both involve                    
          unallocated support payments and interpretation of New Jersey               
          law, respondent’s reliance on Gonzales to frame his answer in the           
          instant case was substantially justified.                                   
               Based on the facts available to respondent, as well as the             
          legal precedent regarding the deductibility of unallocated                  
          support payments, specifically this Court’s holding in Gonzales             
          v. Commissioner, supra, respondent’s position in his answer had a           
          reasonable basis in both law and fact, and therefore was                    
          substantially justified.                                                    
               Because respondent’s position in the judicial proceeding was           
          substantially justified, Mr. Kean is not deemed to be a                     
          prevailing party as defined in section 7430(c)(4).  Consequently,           
          Mr. Kean is not entitled to recover any of his claimed costs                
          under section 7430.  As a result of this holding, we need not               
          address the questions of whether Mr. Kean meets the net worth               

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