-14-
(3) Not unreasonably protract the administrative proceeding
or the proceeding in this Court. Sec. 7430(b)(4). Respondent
concedes that petitioners met this requirement.
(4) Establish that respondent's positions in the
administrative proceeding and the proceeding in this Court were not
substantially justified in law or in fact. Sec. 7430(c)(4)(A)(i),
(7)(A) and (B); Pierce v. Underwood, 487 U.S. 552, 564-565 (1988);
Huffman v. Commissioner, 978 F.2d 1139, 1143-1147 (9th Cir. 1992),
affg. in part, revg. in part on other grounds, and remanding T.C.
Memo. 1991-144; Sliwa v. Commissioner, 839 F.2d 602, 606 (9th Cir.
1988); Powers v. Commissioner, 100 T.C. 457, 470 (1993). As
discussed below, we hold that petitioners did not meet this
requirement.
(5) Exhaust any administrative remedies available in the
IRS.6 Sec. 7430(b)(1). Respondent concedes that petitioners met
this requirement.
(6) Have a net worth that did not exceed $2 million at the
time the petition was filed in the case. Sec. 7430(c)(4)(A)(iii);
28 U.S.C. sec. 2412(d)(2)(B) (1988). Respondent concedes that
petitioners met this requirement.
(7) Establish that the amount of costs claimed is reasonable.
Sec. 7430(a), (c)(1) and (2). Because of our disposition of
petitioners' motion, we do not reach this issue.
6 This requirement only applies to a judgment for an
award of reasonable litigation costs. Sec. 7430(b)(1).
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