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for trial in Spokane, Washington, during the trial session
beginning on June 10, 1996.
Prior to trial, on March 22, 1996, petitioners filed a
motion for partial summary judgment as to whether the requisite
profit motive existed in the operation of their Amway business.
In conjunction with the motion for partial summary judgment,
petitioners provided additional information to respondent
relating to their Amway business.
On June 10, 1996, the parties filed a stipulation of settle-
ment. The stipulation of settlement reflects deficiencies of
$269 and $294 for the taxable years 1992 and 1993, respectively.
On June 10, 1996, petitioners filed a motion for award of
reasonable litigation costs.
Discussion
In order to be awarded litigation costs, petitioners must
show that: (1) They exhausted all administrative remedies; (2)
they met the net worth requirement of section 7430(c)(4)(A)(iii);
(3) they have substantially prevailed with respect to the amount
in controversy or the most significant issue presented; and
(4) the position of respondent was "not substantially justified".
Sec. 7430.
Respondent concedes that petitioners satisfy conditions
(1) through (3), leaving for decision the issue of substantial
justification for respondent's position. Petitioners' motion for
award of reasonable litigation costs was filed prior to the
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