Danny K. Eldridge and Elma J. Eldridge - Page 3

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          costs incurred in connection with the administrative and court              
          proceeding.  Sec. 7430(a); Huffman v. Commissioner, 978 F.2d 1139           
          (9th Cir. 1992), affg. in part, revg. in part, and remanding T.C.           
          Memo. 1991-144; Gustafson v. Commissioner, 97 T.C. 85, 87-88                
          (1991).  In order to be entitled to an award of reasonable                  
          administrative or litigation costs, the moving party must                   
          establish the following: (1) That the party is a "prevailing                
          party" within the meaning of section 7430(c)(4)(A); (2) that the            
          party did not unreasonably protract either the administrative or            
          court proceeding; and (3) that the administrative or litigation             
          costs claimed by the party are reasonable within the meaning of             
          section 7430(c)(1) and (2).  Powers v. Commissioner, 100 T.C.               
          457, 469 (1993), affd. in part, revd. in part, and remanded 43              
          F.3d 172 (5th Cir. 1995).  With respect to claims for litigation            
          costs, taxpayers also are required to show that administrative              
          remedies were exhausted.  Id. at 469.                                       
               A taxpayer is a "prevailing party" in a court proceeding               
          only if it is established that: (1) The position of the United              
          States in the proceeding was not substantially justified; (2) the           
          taxpayer substantially prevailed with respect to the amount in              
          controversy or with respect to the most significant issue                   
          presented; and (3) the taxpayer met the net worth requirements of           
          28 U.S.C. section 2412(d)(2)(B)(1988).  Sec. 7430(c)(4)(A); Comer           
          Family Equity Pure Trust v. Commissioner, 958 F.2d 136, 139 (6th            
          Cir. 1992), affg. per curiam T.C. Memo. 1990-316; Powers v.                 

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