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The disputed aspects of the instant motion for recovery of
administrative costs involve whether respondent was substantially
justified in his Appeals Office disallowance of $2,092,364 in
claimed gambling losses and whether decedent’s estate’s net worth
at the time of decedent’s death exceeded $2 million.
Discussion
Under section 7430, among other requirements, no award of
administrative costs is available either if the respondent’s
position was substantially justified or if an estate’s net worth
exceeded $2 million at the time of the decedent’s death. Sec.
7430(c)(4)(A), (B)(i), (D)(i)(I); see also 28 U.S.C. sec.
2412(d)(2)(B) (2000).
Generally, before respondent’s examination office and
Appeals Office, taxpayers have the burden of proving their
entitlement to claimed expenses and losses. Norgaard v.
Commissioner, 939 F.2d 874, 878 (9th Cir. 1991), affg. and revg.
in part on another ground T.C. Memo. 1989-390. In connection
with a motion for litigation or administrative costs, respondent
has the burden of establishing that his position was
substantially justified, and taxpayers have the burden of
establishing that they satisfy the other requirements of section
7430. Rule 232(e).
Section 165(d) provides a deduction for losses from wagering
transactions up to the amount of winnings from wagering
transactions.
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