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Discussion
The prevailing party in a Tax Court proceeding may be
entitled to recover administrative and litigation costs. See 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 the Commissioner concedes is not
determinative of the reasonableness of the Commissioner’s
position. Wasie v. Commissioner, 86 T.C. 962, 969 (1986). The
taxpayer bears the burden of proving he meets the requirements in
section 7430 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. See Rule 232(e).
The Court determines the reasonableness of respondent’s
position as of the time respondent took the position. Sec.
7430(c)(7). Respondent took a position in the administrative
proceeding 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 the answer. Sec. 7430(c)(7)(A);
Huffman v. Commissioner, 978 F.2d 1139, 1144-1147 (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 justified if they have a reasonable
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Last modified: November 10, 2007