3
Section 7430, as amended by the Technical and Miscellaneous
Revenue Act of 1988, Pub. L. 100-647, sec. 6239, 102 Stat. 3342,
3743-3746 (applicable to proceedings commenced after November 10,
1988), provides that in any court proceeding brought by or
against the United States, the "prevailing party" may be awarded
reasonable litigation costs. To be a prevailing party,
petitioners must establish: (1) That the position of the United
States in the proceeding was not substantially justified; (2)
that they substantially prevailed with respect to the amount in
controversy or with respect to the most significant issue
presented; and (3) that they met the net worth requirements of 28
U.S.C. section 2412(d)(2)(B)(1994) on the date the petition was
filed. Sec. 7430(c)(4)(A). In addition to being the prevailing
party, petitioners must establish that they exhausted the
administrative remedies available to them within the Internal
Revenue Service (IRS), that they did not unreasonably protract
the proceeding, and that the costs claimed are reasonable. Sec.
7430(b)(1), (4), (c). Petitioners must establish all of the
above elements in order to recover. See Minahan v. Commissioner,
88 T.C. 492, 497 (1987); Prager v. Commissioner, T.C. Memo.
1994-420.
For purposes of petitioners' motion, respondent concedes
that petitioners have exhausted their administrative remedies as
required by section 7430(b)(1) and have satisfied the net worth
requirement of section 7430(c)(4)(A)(iii). Respondent further
concedes that petitioners have not unreasonably protracted these
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