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While petitioner attempted to resolve the matter through
correspondence, it was respondent who failed to cooperate.
Third, when respondent issued the notice of deficiency, the
parties were in the middle of the negotiations process.
Respondent had yet to reply to petitioner's letter of April 26,
1994, and petitioner had no reason to believe that the
negotiations had reached an impasse. Yet on August 9, 1994, 9
months before the period of limitations was to expire, respondent
precipitously issued a notice of deficiency.
For the above reasons, we conclude that petitioner did all
that was necessary in these circumstances to exhaust her
administrative remedies.
III. Unreasonable Protraction of Proceedings
Section 7430(b)(4) provides that a taxpayer may recover
administrative and litigation costs and fees only if she
demonstrates that she did not unreasonably protract the
administrative and Court proceedings. Respondent argues that
petitioner did not provide information regarding the $703.50
check in a timely manner. Consequently, respondent argues that
petitioner unreasonably protracted the litigation. We disagree.
The issue relating to the $703.50 check was not the last
issue settled by the parties. On October 6, 1995, respondent
conceded this issue. Yet the issue relating to the $2,427.45
reported by petitioner as miscellaneous income was not settled
until October 11, 1995. Thus, any delay attributable to the
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