- 16 -
become final. See, e.g., Cassuto v. Commissioner, 93 T.C. 256,
260 (1989), affd. in part, revd. in part, and remanded on another
issue 936 F.2d 736 (2d. Cir. 1991). Having so held, we turn to
the merits of petitioners' motion.
Section 7430 provides that, in any court proceeding brought
by or against the United States, the "prevailing party" may be
awarded reasonable litigation costs. Sec. 7430(a). To qualify
as a "prevailing party" for purposes of section 7430,
petitioners must establish that: (1) The position of the United
States in the proceeding was not substantially justified; (2)
they substantially prevailed with respect to the amount in
controversy, or with respect to the most significant issue
presented; and (3) they met the net worth requirements of 28
U.S.C. sec. 2412(d)(2)(B) (1994), on the date the petition was
filed. Sec. 7430(c)(4)(A). Petitioners must also establish that
they exhausted the administrative remedies available to them
within the Internal Revenue Service and that they did not
unreasonably protract the proceedings. Sec. 7430(b)(1), (4).
Petitioners bear the burden of proof with respect to each of the
preceding requirements. Rule 232(e).
Although it is conceded that petitioners substantially
prevailed in this case, respondent does not agree that her
litigation position was not substantially justified.7
7
Respondent argues that our consideration of whether she was
(continued...)
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