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unreasonably protracted proceedings (sec. 7430(b)(3)); and (4)
the amount of costs petitioner claims is not reasonable, and
petitioner neither paid nor incurred the claimed costs (subsecs.
(a)(2) and (c)(1) of sec. 7430).
We consider first whether respondent’s position was
substantially justified.
C. Substantially Justified
To recover costs from respondent, petitioner must establish
he is the “prevailing party” within the meaning of section
7430(c)(4). Petitioner has satisfied the requirements of section
7430(c)(4)(A) (“substantially prevailed” and net worth).
However, under section 7430(c)(4)(B)(i), petitioner shall not be
treated as having satisfied the prevailing party requirement if
respondent “establishes that the position of the United States in
the proceeding was substantially justified.” Although the
overall burden of proof as to “prevailing party” is on
petitioner, the statute itself places on respondent the burden of
proof on the “substantially justified” element. See discussion
in Fla. Country Clubs, Inc. v. Commissioner, 122 T.C. 73, 79
(2004), affd. 404 F.3d 1291 (11th Cir. 2005).
Respondent contends that (1) petitioner did not respond to
the May 16, 2003, letter; (2) petitioner did not provide any
supporting documentation in response to the notice of deficiency
before respondent’s answer was filed; and (3) this Court should
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