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petitioner thereafter filed its motion for costs. Respondent
filed notice of objection to petitioner's motion for costs on
June 28, 1996, pursuant to the Court's Order. No hearing has
been requested and none is necessary. Rule 232(a)(3). The
issues for decision are: (1) Whether petitioner qualifies as a
"prevailing party" for purposes of section 7430 and, if so, (2)
whether the administrative and litigation costs petitioner seeks
are reasonable.
A taxpayer considered a prevailing party in a civil tax
proceeding may be awarded a judgment for reasonable
administrative and litigation costs incurred in that proceeding.
Sec. 7430(a)(1) and (2). A taxpayer must satisfy several
conjunctive requirements to be deemed a prevailing party. Sec.
7430(c); Polyco, Inc. v. Commissioner, 91 T.C. 963, 964 (1988);
see Minahan v. Commissioner, 88 T.C. 492, 497 (1987). The
taxpayer must:
(1) Establish that the position of the United States in the
civil proceeding was not substantially justified (sec.
7430(c)(4)(A)(i));
(2) substantially prevail in the litigation (sec.
7430(c)(4)(A)(ii)); and
(3) if the taxpayer is a corporation, meet the net worth and
number of employee requirements of 28 U.S.C. sec. 2412(d)(2)(B)
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