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Discussion
A party may recover administrative or litigation costs in a
Tax Court proceeding when such party has substantially prevailed
or is treated as the prevailing party. Sec. 7430(a); Rule 231.
Petitioner, however, will not be treated as the prevailing party
if respondent establishes that respondent’s position was
substantially justified (i.e., had a reasonable basis in law and
fact). Sec. 7430(c)(4)(B); see Pierce v. Underwood, 487 U.S.
552, 565 (1988). Respondent’s position on the date he issued the
notice of deficiency and after filing his answer with this Court
is relevant in determining whether respondent was substantially
justified. Grant v. Commissioner, 103 F.3d 948, 952 (11th Cir.
1996), affg. T.C. Memo. 1995-374. In cases where respondent is
substantially justified, the taxpayer may still be treated as the
prevailing party if he makes, pursuant to section 7430(g), a
qualified offer. Sec. 7430(c)(4)(E); Haas & Associates
Accountancy Corp. v. Commissioner, 117 T.C. 48 (2001), affd. 55
Fed. Appx. 476 (9th Cir. 2003). Except as provided in section
7430(c)(4)(B), petitioner bears the burden of proving that he
meets the requirements of section 7430. Rule 232(e). The fact
that respondent loses an issue is not determinative of the
reasonableness of respondent’s position. Wasie v. Commissioner,
86 T.C. 962, 969 (1986).
Petitioner contends that he exhausted all administrative
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Last modified: May 25, 2011