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administrative and litigating positions were substantially
justified and that the costs petitioner claims are unreasonable.
A. Whether Respondent’s Administrative and Litigation Positions
Were Substantially Justified
For purposes of section 7430, an administrative proceeding
is any procedure or action before the Internal Revenue Service
(the Service), sec. 7430(c)(5), and the “position of the United
States” in an administrative proceeding refers to the position
taken by the Service as of the earlier of (i) the date of the
receipt by the taxpayer of the notice of decision of the Internal
Revenue Service Office of Appeals or (ii) the date of the notice
of deficiency, sec. 7430(c)(7)(B); see also sec. 301.7430-3(a),
(c), Proced. & Admin. Regs. In this case, the relevant position
is that taken by the Appeals Office in the notice of
determination dated September 10, 2002.
For purposes of section 7430, a court proceeding means any
civil action brought in a court of the United States, including
this Court, sec. 7430(c)(6), and the “position of the United
States” in a court proceeding means the position taken by the
United States in a judicial proceeding to which section 7430(a)
applies, sec. 7430(c)(7)(A). In this case, respondent’s
litigating position is that taken in his answer to petitioner’s
petition. See Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th
Cir. 1992), affg. in part, revg. in part and remanding T.C. Memo.
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