Act of 1926, ch. 27, 44 Stat. 56. No comparable section was included in the estate tax provisions of that Act. No mention was made of the gift tax because that tax did not come into existence until the Revenue Act of 1932. In enacting the gift tax provisions of the 1932 Act, Congress included section 512(g) of the Revenue Act of 1932, ch. 209, 47 Stat. 250, which was, except for the designated tax, a verbatim version of section 274(g) of the Revenue Act of 1926; no reference to section 512(g) appears in the committee reports accompanying the 1932 Act. No comparable section was included in the estate tax provisions of the 1932 Act. Sections 274(g) and 512(g) were incorporated into the Internal Revenue Code of 1939 by section 272(g) (relating to the income tax) and section 1012(g) (relating to the gift tax); again no comparable section was included in the estate tax provisions of the 1939 Code. This situation remained until the enactment of the 1954 Code, when sections 272(g) and 1012(g) were combined into section 6214(b). The only legislative history in respect of this action is the identical comment in the committee reports that "This section represents no change in existing law". H. Rept. 1337, 83d Cong., 2d Sess. A405 (1954); S. Rept. 1622, 83d Cong., 2d Sess. 573 (1954). Of interest is the fact that section 6214(b) speaks only of an income tax or gift tax deficiency although it is included in subchapter B of chapter 63 entitled "Deficiency Procedures in the Case of Income, Estate, Gift*** Taxes". Granted that there is no legislative explanation as to why the limitation of the authority of this Court by section 6214(b) or its antecedents did not extend to the estate tax, the foregoing analysis of legislative action reinforces our interpretation that the words "the tax" in section 6214(b) are limited to income and gift taxes and therefore do not preclude us from allowing equitable recoupment of an estate tax overpayment against an income tax deficiency. In this connection, we note that what is involved herein is a question of our authority and not a question of our jurisdiction since we already have jurisdiction by virtue of the income tax deficiency notice and the timely petition filed in response thereto. Thus, the cases articulating a principle that the jurisdiction of this Court is limited to that conferred upon it by Congress represented by Commissioner v. Gooch Milling & Elevator Co., supra, and its progeny, have no application. See Estate of Mueller v. Commissioner, 101 T.C. at 553, 560. In sum, we hold that petitioners are entitled to recoup the barred estate tax overpayment against the stipulated income tax deficiencies. Thus, we shall grant petitioners' motion and deny respondent's motion for summary judgment. To take into account our conclusion herein and the stipulation of settled issues, An appropriate order will be issued, and decision will be entered under Rule 155. PAUL FREHE ENTERPRISES, INC., PETITIONER v. RESPONDENT Docket No. 22080-91. Filed June 13, 1996. Petitioner moved for award of reasonable litigation costs in a so-called actuarial case. Held, respondent's position was substantially justified. Held, further, petitioner's motion for award of reasonable litigation costs is denied. Jack H. Kaufman, for petitioner. Linda L. Conway and James J. Posedel, for respondent. OPINION CLAPP, Judge: This case is before us on petitioner's motion for award of reasonable litigation costs pursuant to section 7430 and Rules 230 through 232. After concessions by respondent, we must decide whether respondent's litigating position was "not substantially justified", as that phrase is used in section 7430(c)(4)(A)(i). If that question is resolved in favor of petitioner, then we must decide whether the amount of costs and attorney's fees claimed by petitioner is reasonable. All section references are to the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure. References to section 7430 are to that section as amended by section 1551 of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752 (effective for proceedings commenced after December 31, 1985), and by section 6239 of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3743-3746 (effective for proceedings commenced after November 10, 1988). Section 7430(a) authorizes the Court to award reasonable administrative costs and reasonable litigation costs to taxpayers who prevail against the United States in civil tax litigation. To obtain an award of litigation costs taxpayers must prove that they are the "prevailing party" within the meaning of section 7430(c)(4), which requires, inter alia, that they establish that the Commissioner's position in the proceeding was not substantially justified. The position taken by the United States, for purposes of administrative costs, refers to the position taken in an administrative proceeding, determined in this case as of July 22, 1991, the date of the notice of deficiency. Sec. 7430(c)(7)(B)(ii). The position taken by the United States, for purposes of litigation costs, refers to the position of the United States in a judicial proceeding. Sec. 7430(c)(7)(A). A judicial proceeding is commenced in this Court with the filing of a petition. Rule 20(a). Generally, the Commissioner takes a position on the date the answer is filed. Huffman v. Commissioner, 978 F.2d 1139, 1148 (9th Cir. 1992), affg. in part and revg. in part T.C. Memo. 1991-144. In order to recover administrative costs and litigation costs, the taxpayer must establish that the position of the United States was not substantially justified in both the administrative and the court proceedings. Id. at 1143-1147. It is not entirely clear from petitioner's motion whether petitioner seeks the recovery of reasonable administrative costs. The ambiguity does not change our analysis. Respondent contends, and petitioner does not dispute, that the position taken in her answer, filed November 22, 1991, did not differ from the position taken in the notice of deficiency. In both, respondent maintained that petitioner had not demonstrated entitlement to the deductions for contributions to a qualified retirement plan. Petitioner's case is one of many so-called actuarial cases which resulted from respondent's actuarial project involving the reasonableness of actuarial assumptions in connection with deductions for contributions to individual defined benefit pension plans. Many of the issues raised in petitioner's motion for award of reasonable litigation costs were answered by this Court in Price v. Commissioner, 102 T.C. 660, 662-665 (1994), affd. without published opinion sub nom. TSA/Stanford Associates, Inc. v. Commissioner, 77 F.3d 490 (9th Cir. 1996). There is no need to repeat that discussion. The statutory notice of deficiency in this case was issued by respondent on July 22, 1991. The petition was filed on September 30, 1991. In June of 1995, respondent made a full concession of the underlying actuarial issues. A decision of no deficiency in income tax and no additions to tax was signed by petitioner's counsel on June 29, 1995, and by respondent's counsel on July 13, 1995, and was filed with this Court as a settlement stipulation on July 18, 1995. During this intervening period prior to respondent's concession, the following cases were decided by this Court in favor of the taxpayers and were affirmed by the Courts of Appeals for the Fifth, Second, and Ninth Circuits: Vinson & Elkins v. Commissioner, 99 T.C. 9 (1992), affd. 7 F.3d 1235 (5th Cir. 1993); Wachtell, Lipton, Rosen & Katz v. Commissioner, T.C. Memo. 1992-392, affd. 26 F.3d 291 (2d Cir. 1994); and Citrus Valley Estates v. Commissioner, 99 T.C. 379 (1992), affd. in part and remanded in part 49 F.3d 1410 (9th Cir. 1995). These were considered the lead actuarial cases. The parties selected the lead actuarial cases as a group in order to raise all or substantially all issues necessary to resolve the hundreds of actuarial cases pending across the country. The parties contemplated and understood that the lead actuarial cases were considered a package. The relevant dates for these cases are as follows: The District Court for the Western District of Michigan decided the issue of reasonableness of actuarial adjustments in favor of the taxpayers. Rhoades, McKee & Boer v. United States, 822 F. Supp. 445 (W.D. Mich. 1993), affd. in part and revd. in part and remanded 43 F.3d 1071 (6th Cir. 1995). On remand, however, the District Court found that the actuarial assumptions used were not reasonable in the aggregate. Rhoades, McKee & Boer v. United States, 76 AFTR 2d 956394, 95-2 USTC par. 50,486 (W.D. Mich. 1995). We also note that in 1989 the Court of Appeals for the Seventh Circuit found in favor of the Commissioner on similar issues. Jerome Mirza & Associates, Ltd. v. United States, 882 F.2d 229 (7th Cir. 1989). Neither the Court of Appeals for the Fifth Circuit's opinion in Vinson & Elkins, nor the Court of Appeals for the Second Circuit's opinion in Wachtell, Lipton produced well-defined conflicts with the Court of Appeals for the Seventh Circuit's opinion in Jerome Mirza. By May 19, 1993, the Commissioner had appealed Citrus Valley, which presented an acknowledged conflict with the Court of Appeals for the Seventh Circuit's opinion in Jerome Mirza. Citrus Valley also presented issues similar to those decided in Vinson & Elkins and Wachtell, Lipton. Under these circumstances, respondent's decision to await the outcome on appeal of the lead actuarial cases, including Citrus Valley, before settling this case was substantially justified. A failure by the Commissioner or the taxpayers to pursue any of the lead cases to a definitive conclusion would have defeated the purpose of the litigation format. Our opinion in Citrus Valley Estates v. Commissioner, supra, was affirmed by the Court of Appeals for the Ninth Circuit on March 8, 1995. The period in which the Commissioner might have filed a petition for writ of certiorari did not expire until June 7, 1995. Following the Commissioner's decision not to seek certiorari, a concession letter was sent to petitioner's counsel on June 14, 1995, which resulted in the aforesaid settlement stipulation filed July 18, 1995. Respondent's position with respect to actuarial assumptions in this case was the same as her position in Vinson & Elkins; Wachtell, Lipton; and Citrus Valley. The Commissioner's position had merit and was competently presented at trial and argued on brief, though ultimately unsuccessful. Having decided not to apply to the Supreme Court of the United States for certiorari, respondent moved very promptly following the expiration of the time for filing a petition for writ of certiorari to send a letter to petitioner's counsel |