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sec. 7430(a); Rule 231. However, a taxpayer will not be treated
as the prevailing party if the Commissioner’s position was
substantially justified. Sec. 7430(c)(4)(B); see Pierce v.
Underwood, 487 U.S. 552, 565 (1988). The fact that Commissioner
concedes is not determinative of the reasonableness of
Commissioner’s position. Wasie v. Commissioner, 86 T.C. 962, 969
(1986). The taxpayer bears the burden of proving the elements in
section 7430 required for an award of costs, except that the
taxpayer will not be treated as the prevailing party if the
Commissioner establishes that the position of the Commissioner
was substantially justified.4 See Rule 232(e).
The Court determines the reasonableness of respondent’s
position as of the time respondent took respondent’s position.
Sec. 7430(c)(7). In the administrative proceeding here,
respondent took a position as of the date of the notice of
deficiency. Sec. 7430(c)(7)(B). In the judicial proceeding,
respondent took a position when respondent filed respondent’s
answer. Sec. 7430(c)(7)(A); Huffman v. Commissioner, 978 F.2d
1139, 1144-47 (9th Cir. 1992), affg. in part, revg. in part on
other grounds and remanding T.C. Memo. 1991-144. Respondent’s
administrative and litigation positions are substantially
4The elements of sec. 7430 other than those relevant to
whether petitioner was the prevailing party are not discussed.
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Last modified: May 25, 2011