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expenses that have been paid or incurred in connection with a
court proceeding before the filing of the motion. Thus, the
"proceeding" referred to in section 7430(c)(1)(B)(iii)
necessarily commences before the motion for litigation costs is
filed; i.e., with the filing of the petition.
Similarly, section 7430(c)(4)(A) defines the term
"prevailing party" to mean--
any party in any proceeding * * *
* ** * * * * *
(ii) which--
(I) has substantially prevailed with respect
to the amount in controversy, or
(II) has substantially prevailed with respect
to the most significant issue or set of issues
presented, and
(iii) which meets the * * * [applicable net worth
requirements].
For a taxpayer to satisfy those conditions, the taxpayer must
necessarily look back to the part of the proceeding that occurred
before the filing of the motion for costs. Thus, the
"proceeding" referred to in section 7430(c)(4)(A) necessarily
commences before the motion for costs is filed.
Further, section 7430(c)(4)(B)(i) requires that the
Commissioner establish that the Commissioner's position was
substantially justified "in a proceeding". The "proceeding"
referred to in such section must necessarily commence before the
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