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jurisdiction; it merely creates a procedure for awarding costs in related cases. It is not sufficient to extend our authority to allow an award of litigation costs in cases filed before the effective date of the section, even if they are consolidated with cases filed after that date. Therefore, we may not award litigation costs in docket No. 29402-82.

We turn now to the question of whether litigation costs should be awarded in docket No. 9885-83 involving the years 1977, 1979, and 1980. Section 74305 provides for the award of reasonable litigation costs to the prevailing party in civil proceedings brought by or against the United States. Sec. 7430(a).6 To be a prevailing party, petitioners must have substantially prevailed with respect to the amount in controversy or the most significant issue or set of issues in the case, and establish that the position of the United States in the civil proceeding was unreasonable. Sec. 7430(c)(2)(A).?

We will begin with the question of whether respondent's position in the case was reasonable. That depends upon whether, based on all the facts and circumstances in the case, he had reasonable positions in both law and fact; the fact that respondent loses or concedes is not necessarily determinative. Wasie v. Commissioner, 86 T.C. 962, 968-969 (1986). We restrict our inquiry to the reasonableness of respondent's position after the time that the petition was filed. Baker v. Commissioner, 787 F.2d 637 (D.C. Cir. 1986), affg. on this issue 83 T.C. 822 (1984); Don Casey Co. v. Commissioner, 87 T.C. 847, 861-862 (1986); see also Wickert v. Commissioner, 842 F.2d 1005 (8th Cir. 1988); Ewing & Thomas, P.A. v. Heye, 803 F.2d 613 (11th Cir. 1986); United States v. Balanced Financial Management, Inc., 769 F.2d 1440 (10th Cir. 1985).8 Petitioners have the burden of proving that respondent's positions were unreasonable. Rule 232(e).

(2) a case or cases involving a return or returns of the same taxpayer (including joint returns of married individuals) which could have been joined in a single proceeding in the

same court, such actions or cases shall be treated as one civil proceeding regardless of whether such joinder or consolidation actually occurs, unless the court in which such action is brought determines, in its discretion, that it would be inappropriate to treat such actions or cases as joined or consolidated for purposes of this section.

5Sec. 7430 was amended by the Tax Reform Act of 1986. See Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551, 100 Stat. 2085, 2752. The amendments apply to amounts paid after Sept. 30, 1986, in civil actions or proceedings commenced after Dec. 31, 1985. Tax Reform Act of 1986, sec. 1551(h)(1), 100 Stat. 2753. This action was commenced before Dec. 31, 1985, so the 1986 amendments to sec. 7430 are not applicable.

6That subsection provides:
SEC. 7430(a). IN GENERAL. - In the case of any civil proceeding which is-

(1) brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, and

(2) brought in a court of the United States (including the Tax Court and the United States Claims Court), the prevailing party may be awarded a judgment (payable in the case of the Tax Court in the same manner as such an award by a district court) for reasonable litigation costs incurred in such proceeding.

?As in effect for the year when this case was commenced, that subparagraph provided:

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

(i) establishes that the position of the United States in the civil proceeding was unreasonable, and (ii)(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.

The parties are in agreement that the two significant issues for 1977 were who should be taxable on the income from the sale of the Williams stock to Williams, and whether the statute of limitations barred assessment when the notice of deficiency was issued. Petitioners have conceded that respondent's position on the taxability of income issue was reasonable, so only the statute of limitations issue must be considered.

Respondent contends that section 6501(e), which imposes a 6-year statute of limitations if there are "substantial omissions” from gross income, applies to 1977. Petitioners contend that the information disclosed on their 1977 return was sufficient for respondent to have had the requisite “clue” as to any unreported income (see Colony, Inc. v. Commissioner, 357 U.S. 28 (1958)), so that only the normal 3-year statute set out in section 6501(a) applies. They also contend that because respondent had the burden of proving that the statute of limitations does not bar assessment, his action is less likely to be reasonable.

We agree with respondent that his position was reasonable. The question of whether disclosure was sufficient for petitioners to have the benefit of section 6501(e)(1)(A)(ii)o is one of fact (University Country Club, Inc. v. Commissioner, 64 T.C. 460, 468 (1975); George Edward Quick Trust v. Commissioner, 54 T.C. 1336, 1346-1347 (1970), affd. per curiam 444 F.2d 90 (8th Cir. 1971)); and petitioners bear the burden of proof. University Country Club, Inc. v. Commissioner, 64 T.C. at 468. Leaving aside the question of how the issue might ultimately have been determined in the event of trial, it is clear that respondent was reasonable in pursuing the matter, given the location of the burden of proof as to reasonableness and the fact that the only stock disclosed as sold by petitioners was that which they admitted was theirs, not that which they claimed was their children's or had been donated to the church.

*Other courts, however, look to the prepetition period as well. See Sliwa v. Commissioner, 839 F.2d 602 (9th Cir. 1988); Powell v. Commissioner, 791 F.2d 385 (5th Cir. 1986); Kaufman v. Egger, 758 F.2d 1 (1st Cir. 1985).

"That clause, which codified the rule in Colony, Inc. v. Commissioner, 357 U.S. 28 (1958), provides: "In determining the amount omitted from gro income, there shall not be taken into account any amount which is omitted from gross income stated in the return if such amount is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the Secretary of the nature and amount of such item.” Sec. 6501(e)(1)(A)(ii).

Petitioners also argue that respondent's determination and pursuit of the addition to tax for fraud for 1979 and 1980 was unreasonable. We disagree. Fraud is a question of fact, to be determined from all the facts and circumstances in the record. Gajewski v. Commissioner, 67 T.C. 181 (1976), affd. without published opinion 578 F.2d 1383 (8th Cir. 1978). Among the indicia of fraud are the failure to report substantial sums of income over a period time (Rutana v. Commissioner, 88 T.C. 1329, 1336 (1987)), and conduct calculated to mislead or conceal (Gajewski v. Commissioner, 67 T.C. at 200). The first occurred here from 1978 to at least 1980, when petitioners reported their income on trust returns rather than on individual returns, and the second arguably occurred from 1972 to 1977, years when petitioners filed protester-type returns.

We do not think that respondent's offer to concede all or part of the fraud issue in appeals conferences in both offices where the case was considered indicates unreasonableness, at least where such concessions were tied to concessions which he reasonably sought from petitioners, i.e., the taxability of income issue for 1977 (see p. 707 supra). The fact that different terms were offered by different appeals

officers in two different cities does not make the concession unreasonable. 10

The fact that the burden of proof as to fraud is on the respondent does not make his position herein unreasonable. In Rutana v. Commissioner, supra, and Don Casey Co. v. Commissioner, supra, there were actual trials, and we were able to measure all the evidence presented by respondent against the “clear and convincing" standard of proof imposed upon him. Sec. 7454(a). In a situation where no trial occurs and where the burden of proof as to the unreasonableness of respondent's position is on petitioners, we think that, at most, the extent of respondent's burden is to come forward with evidence to provide a foundation for his determination that fraud may be present sufficient to convince us that he might have prevailed had he faced the necessity of developing that evidence further in the event of trial. In a sense, this is comparable to the burden of coming forward, in certain situations, with evidence linking the taxpayer with alleged income-producing activities. See Tokarski v. Commissioner, 87 T.C. 74, 76-77 (1986). Given the circumstances previously set forth (see p. 708 supra), we think respondent has produced sufficient evidence to support the conclusion that petitioners have not satisfied their burden of proving that respondent's maintenance of his position on the fraud issue was unreasonable.

Nor are we persuaded that respondent's position should be held to be unreasonable because he allegedly has not determined the addition to tax for fraud in other cases involving family trusts. In the first place, we are not satisfied that this is true. See McKenzie v. Commissioner, T.C. Memo. 1987-12; Dick H. McKenzie Family Estate v. Commissioner, T.C. Memo. 1984-9. In the second place, the absence of a determination of fraud, an entirely factual question, in one or more cases,

cases, does not dictate the conclusion that such a determination in a particular case is unreasonable.11

In sum, we conclude that petitioners have not carried their burden of proof that respondent was unreasonable in maintaining his position on the significant issues with respect to the taxable years 1977, 1979, and 1980 (docket No. 9885-83). In view of this conclusion, we need not consider the extent to which petitioners were the prevailing party or the nature of the reasonable litigation costs (see note 2, supra).

10We note that there were appeals conferences in two different cities because the place of trial was changed at petitioners' request.

Cf. Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324, 328 (1974), where we refused to look behind a deficiency notice because of claimed discrimination on the part of respondent.

In view of the foregoing, petitioners' motion for an award of litigation costs will be denied and decision will be entered in accordance with the supplemental stipulation of the parties.

Appropriate orders and decisions will be entered



Docket Nos. 35928-85, 6712-86.

Filed April 18, 1988.

Petitioners owned working interests in the East Binger Unit. In September 1977, a miscible flue-gas injection project was begun. There were 17 injection wells and the injection pattern was an inverted nine-spot pattern with the injection well in the center of a nine-well array. The well density was 160 acres per well. Performance of the project was designed to affect the entire reservoir. Performance of the project was substantially below that expected due primarily to operational problems and reservoir characteristics significantly different from those initially premised. In May 1978, the property owners in the unit commissioned Intercomp to prepare a compositional simulation study to ascertain why the project had failed to perform as expected and to evaluate the alternatives available. The working interest owners decided to implement case IV of the Intercomp study. Case IV was implemented beginning in 1980, and was completed in 1983. Production from the first two wells drilled pursuant to case IV, which were completed in September 1980, relieved reservoir pressure in the area where they were drilled and allowed flue gas to begin moving into that area of the reservoir. Consequently, the injection wells were able to inject more flue gas into the reservoir. At the end of 1983, there were 27 injection wells. The injection pattern was changed to

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