Maggie Management Company - Page 17

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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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Last modified: May 25, 2011