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litigation costs. Sec. 7430(a), (b)(1), (4), (c).
Petitioners bear the burden of proving that each of the foregoing
requirements has been satisfied. Rule 232(e). These
requirements are conjunctive, and failure to satisfy any one will
preclude an award of costs to petitioners. Minahan v.
Commissioner, 88 T.C. 492, 497 (1987).
I. Prevailing Party
To be a "prevailing party", a taxpayer must establish that:
(1) The position of the United States was not substantially
justified; (2) the taxpayer substantially prevailed with respect
to either the amount in controversy or the most significant issue
or set of issues presented; and (3) the taxpayer met the net
worth requirements of 28 U.S.C. sec. 2412(d)(2)(B) (1994) at the
time the petition in the case was filed. Sec. 7430(c)(4)(A).
As we stated earlier, respondent concedes that petitioners
substantially prevailed and met the net worth requirements.
Petitioners contend that respondent's position, that NOA's were
employees of Allstate, was not substantially justified because
respondent advanced this same position previously and lost on the
identical issue several times, citing Mosteirin v. Commissioner,
T.C. Memo. 1995-367 (Mosteirin I); Smithwick v. Commissioner,
T.C. Memo. 1993-582, affd. per curiam sub nom. Butts v.
Commissioner, 49 F.3d 713 (11th Cir. 1995); and Butts v.
Commissioner, T.C. Memo. 1993-478, affd. per curiam 49 F.3d 713
(11th Cir. 1995) (the prior Allstate cases). Respondent argues
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