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II. Reasonableness of the Position of the United States in the
Administrative Proceeding With Respect to Administrative
Costs
As previously discussed, respondent contends that petitioner
does not qualify for an award of reasonable administrative costs
because the position of the United States in the administrative
proceeding was substantially justified. A taxpayer is not
treated as a prevailing party if the Commissioner can establish
that the Commissioner’s position in the administrative proceeding
was substantially justified. Sec. 7430(c)(4)(B); Rule 232(e).
We must identify the point at which the United States is
first considered to have taken a position in the administrative
proceeding, and then decide whether that position from that point
forward was substantially justified. For purposes of the
administrative proceeding in this case, respondent’s position is
that which was articulated in the notice of deficiency issued to
petitioner on June 13, 2003, as the Appeals Office never
considered petitioner’s entitlement to her claimed 2002 refund
before the issuance of the notice of deficiency. See sec.
7430(c)(7)(B); Fla. Country Clubs, Inc. v. Commissioner, 122 T.C.
73, 85-87 (2004), affd. F.3d (11th Cir., Mar. 31, 2005);
Maggie Management Co. v. Commissioner, 108 T.C. 430, 442 (1997);
sec. 301.7430-5(b), Proced. & Admin. Regs.
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Last modified: May 25, 2011