Kevin A. Goon - Page 4

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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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