Mary Lee Sharer - Page 8

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          Discussion                                                                         
                A taxpayer who substantially prevails in an administrative                   
          or court proceeding may be awarded a judgment for reasonable                       
          administrative or litigation costs incurred in such proceedings.                   
          Sec. 7430(a)(1) and (2).  A judgment of administrative or                          
          litigation costs may be awarded under section 7430 if a taxpayer                   
          (1) was the "prevailing party", (2) exhausted the administrative                   
          remedies available to the taxpayer within the IRS, and (3) did                     
          not unreasonably protract the proceedings.  Sec. 7430(a), (b)(1),                  
          (b)(4).  A taxpayer must satisfy each of these three requirements                  
          to be entitled to a judgment under section 7430.  Respondent                       
          concedes that petitioner exhausted the administrative remedies                     
          available to her within the IRS.  We are left to decide (1)                        
          whether petitioner was the "prevailing party", (2) whether                         
          petitioner did not unreasonably protract the proceedings, and (3)                  
          whether the amounts petitioner claims as administrative and                        
          litigation costs are reasonable.                                                   
                To qualify as the "prevailing party", the taxpayer must                      
          establish 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 or set of issues                     
          presented, and (3) the taxpayer satisfies the applicable net                       
          worth requirements.  Sec. 7430(c)(4)(A).  Respondent concedes                      
          that petitioner substantially prevailed with respect to the                        




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Last modified: May 25, 2011