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Furthermore, respondent asserts that petitioners: (1) Have not
satisfied the net worth requirements, (2) failed to exhaust the
administrative remedies available to them within the Internal
Revenue Service, (3) unreasonably protracted the proceedings, and
(4) have not shown that the costs they have claimed are
reasonable. We will address each contested point in turn.
1. Whether Respondent's Litigation Position Was
Substantially Justified
In 1986, Congress amended section 7430 to conform that
provision more closely to the Equal Access to Justice Act
(EAJA). Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551, 100
Stat. 2085, 2752. Where the prior statute required taxpayers to
prove that the Government's position in a proceeding was
"unreasonable," the statute as amended now requires a showing
that the position of the United States was "not substantially
justified." Sec. 7430(c)(4)(A)(i). This Court has concluded
that the substantially justified standard is essentially a
continuation of the prior law's reasonableness standard. Sher v.
7(...continued)
substantially justified in this matter should be based, in part,
on the outcome of a related case involving IRA #1. In docket No.
21109-92, respondent determined, and IRA #1 ultimately conceded,
that IRA #1 had unrelated business income for the taxable year
1988. IRA #1's concession in docket No. 21109-92, however,
appears to have been a direct result of respondent's filing her
notice of no objection to petitioners' motion for summary
judgment in this case. In any event, we give no weight to the
outcome of docket No. 21109-92 because it resulted from an
agreement between the parties to that docket rather than a
judicial determination.
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