                        T.C. Memo. 2006-137



                      UNITED STATES TAX COURT



                 RAJESH PRABHAKAR, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23321-04.                Filed June 27, 2006.


     Rajesh Prabhakar, pro se.

     Laura A. McKenna, for respondent.



                        MEMORANDUM OPINION


     FOLEY, Judge:   This matter is before the Court on

petitioner’s motion for award of reasonable litigation and

administrative costs pursuant to section 74301 and Rule 231.    On


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
                                                   (continued...)
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September 26, 2005, this Court entered a decision, pursuant to a

signed decision document, in favor of petitioner.

                           Background

     Petitioner timely filed his 2002 Federal income tax return.

On this return, petitioner reported wages of $56,225, interest

income of $217, tax-exempt interest income of $457, a capital

loss of $3,000, and a section 222 qualified tuition and related

expenses deduction (tuition expense) of $3,000.   In addition, he

requested a refund of $1,287.

     In a 30-day letter dated May 3, 2004, respondent asserted

that petitioner was liable for an income tax deficiency and

accuracy-related penalty relating to 2002.   Respondent explained

that “Since there was no breakdown on * * * [petitioner’s] tax

return, we could not locate specific amounts of interest,

dividends and/or capital gains distributions to match the amounts

* * * [petitioner’s] payers reported to us.”   Respondent also

disallowed petitioner’s tuition expense.

     Respondent, in the 30-day letter, stated that if petitioner

disagreed with the proposed changes, petitioner should send

respondent a statement “explaining each change you disagree with

and why you disagree [and include] any supporting documents you


     1
      (...continued)
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                 - 3 -

wish us to consider”.   Petitioner, in a letter dated May 9, 2004,

disagreed with respondent’s proposed changes and stated that the

income was properly “accounted for in * * * [his] 2002 Tax

Return”.   Petitioner, however, did admit that he failed to

account for capital gain income relating to the sale of three

mutual funds and concluded that his refund of $1,287 should have

been $1,179 (i.e., a difference of $108).    Petitioner enclosed a

check for $108 but did not attach any supporting documentation.

     By notice of deficiency dated September 7, 2004, respondent

determined a deficiency of $18,402 and a section 6662 accuracy-

related penalty of $3,680 relating to petitioner’s 2002 return.

On December 7, 2004, petitioner, while residing in Lake Forest,

California, filed his petition with this Court.

     In November of 2004, petitioner contacted Heather Smith of

the Taxpayer Advocate Service.    In a letter dated January 10,

2005, Ms. Smith concluded that petitioner, on his 2002 return,

had failed to report dividend income and a “considerable amount

of stocks and bonds income”.   On January 24, 2005, the Court

filed respondent’s answer.   That same day, petitioner, in

response to Ms. Smith’s January 10 letter, sent Ms. Smith a

corrected Schedule D, Capital Gains and Losses, and

substantiation of his tuition expense.    On March 10, 2005, Ms.

Smith forwarded this documentation to respondent’s Appeals
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Office.   After reviewing the documentation, the Appeals officer

agreed with petitioner that there was no deficiency in income

tax, an accuracy-related penalty should not be imposed, and

petitioner’s refund should have been $1,179 rather than $1,287.

Petitioner conceded respondent’s determination relating to the

dividend income.

     On September 26, 2005, the Court entered a decision,

pursuant to a signed decision document, in favor of petitioner in

the amount of $108.   On October 20, 2005, the Court filed

petitioner’s motion for award of reasonable litigation and

administrative costs.   On November 7, 2005, the Court filed

respondent’s objection.

                            Discussion

     Petitioner contends he is entitled to litigation costs

because he “prevailed with respect to the amount in controversy.”

Conversely, respondent contends that his position was

substantially justified because petitioner did not properly

report his interest, dividend, and capital gain income.   In

addition, respondent contends that petitioner failed to

substantiate his tuition expense.

     The prevailing party in a Tax Court proceeding may recover

litigation costs.   See sec. 7430(a); Rule 231.   Petitioner bears

the burden of proving that he meets each requirement of section
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7430.   Rule 232(e).   Petitioner, however, will not be treated as

the prevailing party if respondent’s position was substantially

justified (i.e., had a reasonable basis in law and fact).       Sec.

7430(c)(4)(B); see Pierce v. Underwood, 487 U.S. 552, 565 (1988).

The fact that respondent loses an issue is not determinative of

the reasonableness of respondent’s position.        Wasie v.

Commissioner, 86 T.C. 962, 969 (1986).

     Respondent’s position was reasonable and substantially

justified.   Respondent was not provided with the requisite

documentation until after the answer was filed.       On March 10,

2005, respondent received the documentation relating to the

capital gain income and tuition expense, and, on March 16, 2005,

he conceded those issues and agreed with petitioner.

Accordingly, petitioner’s motion will be denied.

     Contentions we have not addressed are irrelevant, moot, or

meritless.

     To reflect the foregoing,


                                              An appropriate order and

                                         decision will be entered.
