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and relevant legal arguments supporting the taxpayer’s position
to the appropriate Internal Revenue Service personnel. Sec.
301.7430-5(c), Proced. & Admin. Regs. The fact that the
Commissioner eventually conceded a case does not alone establish
that his position was unreasonable. Estate of Perry v.
Commissioner, 931 F.2d 1044, 1046 (5th Cir. 1991); Sokol v.
Commissioner, 92 T.C. 760, 767 (1989).
Here, petitioner failed to specify whether he seeks
litigation or administrative costs. The position of the United
States with respect to recovery of litigation costs is the
position taken by the Commissioner in the answer to the petition.
Sher v. Commissioner, 861 F.2d 131, 134-135 (5th Cir. 1988),
affg. 89 T.C. 79 (1987). For purposes of recovery of
administrative costs, the Commissioner’s position is determined
as of the earlier of the date of the receipt by the taxpayer of
the notice of the decision of the Appeals Office or the date of
the notice of deficiency, which in this case was June 14, 2004.
Sec. 7430(c)(7)(B).
Under section 7430(c)(4), our application of the
substantially justified standard in a litigated case is limited
to the period beginning with the point at which the
Commissioner’s counsel has become involved. Sher v.
Commissioner, 89 T.C. at 86. This would normally take place when
the Commissioner answered the petition. Id. However, in a small
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