and 1994 returns of Mikes and Hamilton in the amounts of $2,698,549 and $2,300,647, respectively.

On May 29, 1998, District Counsel rejected the reviewer's proposal and advised her to obtain petitioners' agreement to extend the statutory period of limitations for assessment, which would allow the staff time to further explore the facts of the case. Petitioners consented to extend the statutory period of limitations until June 30, 1999. Consequently, respondent did not send petitioners any notice of deficiency, nor did respondent issue the reviewer's proposal to petition

ers.

During 1998 and 1999, respondent issued to each petitioner at least three revised 30-day letters proposing adjustments to their 1993 and 1994 reported income. Upon receipt of the final 30-day letters, petitioners protested the proposed adjustments to respondent's Appeals Office.

The parties settled the case sometime in April 2000, without respondent issuing either a notice of deficiency or an Appeals Office notice of decision. Pursuant to the settlement, the parties agreed that petitioners owed no additional taxes for either 1993 or 1994 and in fact were entitled to a refund for 1995.

Petitioners filed a request for administrative costs under section 7430 with respondent, and respondent denied their request on February 28, 2002. Consequently, petitioners timely filed their petition with this Court on May 29, 2002, under section 7430(f) and Rule 271, for administrative costs they incurred after January 18, 1999.3

On May 27, 2003, respondent filed a motion for summary judgment, claiming that petitioners were not entitled, as a matter of law, to recover administrative costs because respondent never took a "position" in the proceedings.

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be granted where there is no genuine issue of any material fact and a decision may be rendered as a matter of law. Rule 121(a) and (b); see Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994);

3 Jan. 18, 1999, is the effective date for the amendments to sec. 7430(c)(2) under the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3101(b), 112 Stat. 728.

Zaentz v. Commissioner, 90 T.C. 753, 754 (1988). The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences will be read in a manner most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). When a motion for summary judgment is made and properly supported, the adverse party may not rest upon mere allegations or denials of the pleadings but must set forth specific facts showing that there is a genuine issue for trial. Rule 121(d). We conclude that there is no genuine issue of material fact precluding us from resolving the question raised in respondent's motion.4

Discussion

Section 7430 has been amended several times since it was enacted in 1982.5 Which provisions (and therefore which amendments) apply in a given case depends on when the proceeding was commenced and the period within which the claimed costs were incurred. Because this proceeding was commenced on May 29, 2002, and the costs were incurred after January 18, 1999, the amendments to section 7430(c)(2) made by the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3101(b), 112 Stat. 727, apply. In addition, we are asked to interpret the amendment in 1996 to section 7430(c)(4) made by the Taxpayer Bill of Rights 2 (TBOR 2), Pub. L. 104-168, secs. 701-704, 110 Stat. 1463-1464.

We begin by discussing the general, operative provisions of section 7430, then discuss the amendments made in TBOR 2 and RRA 1998. We then analyze the arguments each party made, and we conclude that petitioners cannot recover administrative costs.

4 No hearing was requested, and none is required. Rule 232(a). We therefore dispose of the petition without a hearing or further written submissions.

5 Sec. 7430 was enacted in 1982 to allow certain prevailing parties to recover reasonable litigation costs (but not administrative costs) in cases brought by or against the United States to determine, collect, or refund any tax, interest, or penalty. Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248, sec. 292(a), 96 Stat. 572. Sec. 7430 was expanded in 1988 to allow for the recovery of reasonable administrative costs. Technical and Miscellaneous Revenue Act of 1988 (TAMRA), Pub. L. 100-647, sec. 6239(a), 102 Stat. 3743.

I. Section 7430

Recovery of administrative costs is governed by section 7430(a), which permits a taxpayer who is a "prevailing party" in any administrative proceedings brought by or against the United States to recover reasonable administrative costs incurred by him or her in connection with such proceedings. See sec. 7430(a)(1). To be a “prevailing party”, the taxpayer must, inter alia, substantially prevail with respect to the amount in controversy or the most significant issue or set of issues presented. Sec. 7430(c)(4)(A).6 A taxpayer will not qualify as a prevailing party, however, if the Government establishes that "the position of the United States" was substantially justified. See sec. 7430(c)(4)(B). The “position of the United States" is, in turn, defined in section 7430(c)(7) as the position taken by the Government in an administrative proceeding as of the earlier of: (1) The date of receipt by the taxpayer of the notice of decision of the Appeals Office, or (2) the date of the notice of deficiency. Thus, prior to the issuance of a notice of deficiency or an Appeals Office decision, the Government is not considered as having taken any position. See, e.g., Richardson v. Commissioner, T.C. Memo. 1991-427 ("we cannot consider the conduct of the revenue agent prior to *** [date of notice of deficiency]."); Nathaniel v. United States, 69 AFTR 2d 452, 92-1 USTC par. 50,023 (E.D. Cal. 1991) ("The plain language of section 7430(c)(7) precludes the court from considering the position taken by the United States in the administrative proceedings *** [prior to] the date of a notice of deficiency or the date of the

6 Sec. 7430(c) provides in part:

(4) PREVAILING PARTY.—

(A) IN GENERAL.-The term "prevailing party" means any party in any proceeding to which subsection (a) applies (other than the United States or any creditor of the taxpayer involved)—

(i) which

(I) has substantially prevailed with respect to the amount in controversy, or

(II) has substantially prevailed with respect to the most significant issue or set of issues presented, and

(B) EXCEPTION IF UNITED STATES ESTABLISHES THAT ITS POSITION WAS SUBSTANTIALLY JUSTI

FIED.

(i) GENERAL RULE.-A party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified.

receipt by the taxpayer of a notice of a decision of the Office of Appeals").

Respondent argues that because no notice of deficiency or Appeals Office decision was ever issued to petitioners, no "position of the United States” had been taken that can be shown to be substantially justified under section 7430(c)(4)(B). Accordingly, respondent contends, petitioners cannot qualify as a prevailing party under section 7430(c)(4) and cannot therefore recover administrative costs.

Respondent's contention presupposes, of course, that before a taxpayer can qualify as a "prevailing party" under section 7430(c)(4), the Government must take a position as defined in section 7430(c)(7); i.e., issue a notice of deficiency or an Appeals Office decision. This is the first time we are asked to determine this issue since section 7430(c)(4) was amended by TBOR 2 in 1996, and we turn to it now.

A. Pre-TBOR 2 Section 7430(c)(4)

Prior to the TBOR 2 amendment to section 7430(c)(4), the taxpayer had to substantially prevail and, in addition, had the burden of establishing that the "position of the United States" in the proceedings was not substantially justified. If the Government had not taken a position as defined in section 7430(c)(7), the taxpayer could not meet his or her burden of showing that such position was not substantially justified and could not recover administrative costs. See Ball v. Commissioner, T.C. Memo. 1995-520 (noting that section 7430(c)(7) "does not allow an award of administrative costs for a position *** [the Commissioner] takes before * * * [the Commissioner] issues the notice of deficiency or Appeals issues a notice of decision"); In re ACME Music Co., 208 Bankr. 838, 842 n.3 (Bankr. W.D. Pa. 1997) ("until * * * [an Appeals Office decision] is received by a taxpayer or a defi

7 Prior to the TBOR 2 amendment, sec. 7430(c)(4) read, in relevant part, as follows: SEC. 7430(c)(4). PREVAILING PARTY. —

(A) IN GENERAL.-The term "prevailing party" means any party in any proceeding to which subsection (a) applies (other than the United States or any creditor of the taxpayer involved)

(i) which establishes that the position of the United States in the proceeding was not substantially justified,

(ii) which

(I) has substantially prevailed with respect to the amount in controversy, or

(II) has substantially prevailed with respect to the most significant issue or set of issues presented, and ***

ciency notice is issued, the I.R.S. does not take any position in an administrative proceeding and administrative costs cannot be recovered in any event").

B. TBOR 2 Amendment to Section 7430(c)(4)

Congress amended section 7430(c)(4) in TBOR 2 to shift to the Government the burden of establishing that its position was substantially justified. Congress shifted the burden by amending section 7430(c)(4)(B) to provide that a taxpayer cannot be a prevailing party if the Government demonstrates that its position was substantially justified. In doing so, it eliminated any direct reference to the "position of the United States" in section 7430(c)(4)(A). In its current form, therefore, the language of section 7430(c)(4)(A) only requires that the taxpayer show that he or she substantially prevailed.8 Although the language of section 7430(c)(4)(A) no longer mentions the "position of the United States", we interpret the section to require that such a position be taken before a taxpayer can qualify as a prevailing party.

We interpret the language of section 7430(c)(4) by examining all subsections of section 7430. It is a central tenet of statutory construction that, when interpreting any one provision of a statute, the entire statute must be considered. See, e.g., Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 36 (1998); Huffman v. Commissioner, 978 F.2d 1139, 1145 (9th Cir. 1992) (the guiding principle in analyzing the plain meaning of section 7430 is that the entire statute must be examined as a whole, with all of its sections and subsections in mind), affg. in part, revg. in part and remanding T.C. Memo. 1991-144. We turn now to analyzing section 7430(c)(4).

Subparagraphs (A) and (B) of section 7430(c)(4) together set forth circumstances in which a taxpayer is allowed to recover administrative costs. Under subparagraph (A), a taxpayer who substantially prevails with respect to the amount in controversy or issues presented will be a prevailing party unless the Government shows, under subparagraph (B), that its position was substantially justified. Subparagraph (B) of section 7430(c)(4) is not independent from subparagraph (A)

8 In order to be a "prevailing party," a taxpayer must also satisfy certain net worth requirements. See sec. 7430(c)(4)(A)(ii). The net worth requirements are not at issue, however, in this motion for summary judgment action.