Terrell Equipment Company, Inc., et al. - Page 3




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          amounts of administrative and litigation costs claimed by                   
          petitioners are reasonable.                                                 
               Section 7430 provides for the award of administrative and              
          litigation costs to a taxpayer in an administrative or court                
          proceeding brought against the United States involving the                  
          determination of any tax, interest, or penalty pursuant to the              
          Internal Revenue Code.  An award of administrative or litigation            
          costs may be made where the taxpayer (1) is the “prevailing                 
          party”, (2) exhausted available administrative remedies,5 (3) did           
          not unreasonably protract the administrative or judicial                    
          proceeding, and (4) claimed reasonable administrative and                   
          litigation costs.  Sec. 7430(a), (b)(1), (3), (c); Portillo v.              
          Commissioner, 988 F.2d 27, 28 (5th Cir. 1993).  These                       
          requirements are conjunctive, and failure to satisfy any one will           
          preclude an award of costs to petitioners.  Minahan v.                      
          Commissioner, 88 T.C. 492, 497 (1987).                                      
               To be a “prevailing party” (1) the taxpayer must                       
          substantially prevail with respect to either the amount in                  
          controversy or the most significant issue or set of issues                  
          presented, and (2) at the time the petition in the case was                 
          filed, the taxpayer must meet the net worth requirements of 28              
          U.S.C. sec. 2412(d)(2)(B) (1994).  Sec. 7430(c)(4)(A).  A                   


               5  This requirement applies only to litigation costs.  Sec.            
          7430(b)(1).                                                                 





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