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a home. In 1997, David transferred the home to Mr. Tandiono, who
held a mortgage on the property. At the time of the filing of
the petition in 1999, David resided in this home, paying repair
and miscellaneous expenses but no rent. Respondent reconstructed
petitioners’ incomes using the cash expenditures method and
determined unreported income of over $9 million relating to the
years in issue. In February 2002, this Court held that the
amounts in dispute were nontaxable gifts.
On March 22, 2002, petitioners filed their motion for award
of litigation costs (motion). Petitioners’ motion contained a
statement that petitioners each had a net worth of less than $2
million when they filed their petitions. Each petitioner also
submitted a one-page affidavit attempting to verify his or her
net worth. On May 1, 2002, respondent filed his response and
objection to the motion for litigation costs (response and
objection), specifically contending that the affidavits were
insufficient to establish net worth. On June 20, 2002,
petitioners then filed a supplement to motion for award of
litigation costs (supplement) in reply to respondent’s response
and objection but did not address the issue of net worth.
Discussion
The prevailing party in a Tax Court proceeding may recover
litigation costs. Sec. 7430(a); Rule 231. Except as provided in
section 7430(c)(4)(B), petitioners bear the burden of proving
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