Galedrige Construction, Inc. - Page 5

          addition to tax pursuant to section 6661 for substantial                    
          understatement of tax.                                                      
               A taxpayer who substantially prevails in an administrative             
          or court proceeding may be awarded a judgment for reasonable                
          costs incurred in such proceedings.  Sec. 7430(a)(1) and (2).  A            
          taxpayer has the burden of proving that it meets each requirement           
          before we may order an award of costs under section 7430.  Rule             
          232(e); Gantner v. Commissioner, 92 T.C. 192, 197 (1989), affd.             
          905 F.2d 241 (8th Cir. 1990).                                               
               For this Court to award reasonable litigation costs under              
          section 7430, several requirements must be met.  The record must            
          show that:  (1) The moving party did not unreasonably protract              
          the administrative proceeding or the proceeding in this Court.              
          Sec. 7430(b)(4).  (2) The moving party exhausted any                        
          administrative remedies available to him or her in the Internal             
          Revenue Service.  Sec. 7430(b)(1).  Respondent concedes that                
          petitioner satisfies these first two requirements.  (3) The                 
          moving party was the prevailing party.  Sec. 7430(a).  As                   
          discussed below, we find that petitioner has met this                       
               Whether Petitioner Is the Prevailing Party                             
               A taxpayer must satisfy several conjunctive requirements to            
          be deemed a prevailing party.  Sec. 7430(c).  The taxpayer must             
          establish:  (1) The position of the United States in the civil              

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