Ronald A. Horton - Page 7

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         petitioner meets the net worth requirement.  Section                         
         7430(c)(4)(B), however, provides that a taxpayer shall not be                
         treated as the prevailing party if the United States establishes             
         that the position of the United States in the proceeding was                 
         substantially justified.                                                     
              Respondent contends that petitioner is not the prevailing               
         party within the meaning of section 7430(c)(4) because                       
         respondent’s position was substantially justified prior to                   
         December 9, 2004, on which date petitioner faxed to respondent               
         copies of documents sufficient to establish petitioner’s                     
         position.  Within a little over a month thereafter, the parties              
         filed a stipulation that resolved all issues in petitioner’s                 
         favor.  Respondent’s position was substantially justified if,                
         based on all the facts and circumstances and legal precedents                
         related to the case, respondent acted reasonably.  Pierce v.                 
         Underwood, 487 U.S. 552 (1988); Sher v. Commissioner, 89 T.C. 79,            
         84 (1987), affd. 861 F.2d 131 (5th Cir. 1988).  We must examine              
         whether respondent’ position was reasonable given the available              
         facts and circumstances at the time respondent took his position.            
         Maggie Mgmt. Co. v. Commissioner, 108 T.C. 430, 443 (1997).                  
              A significant factor in determining whether the position of             
         the Internal Revenue Service was substantially justified as of a             
         given date is whether, on or before that date, the taxpayer                  
         presented all relevant information under the taxpayer’s control              

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