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motion for costs is filed because the substantial justification
standard applies to the Commissioner's position in respect of the
substantive issues in the case.
Based on the foregoing discussion, we conclude that TBR2
does not apply to a case in this Court unless the taxpayer's
petition is filed after July 30, 1996. See Schlicher v.
Commissioner, T.C. Memo. 1997-163; Austin v. Commissioner, T.C.
Memo. 1997-157. Because petitioner filed its petition on May 16,
1994, before the effective date of TBR2, it follows that section
7430 as amended by TAMRA, and not section 7430 as amended by
TBR2, applies in deciding petitioner's motion for costs.
Under section 7430(a) as amended by TAMRA, a taxpayer must
satisfy several conjunctive requirements to be deemed a
prevailing party. Sec. 7430(c); Polyco, Inc. v. Commissioner, 91
T.C. 963, 964 (1988); see Minahan v. Commissioner, 88 T.C. 492,
497 (1987). The taxpayer must:
(1) Establish that the position of the United States in the
civil proceeding was not substantially justified, section
7430(c)(4)(A)(i);
(2) substantially prevail in the litigation, section
7430(c)(4)(A)(ii); and
(3) if the taxpayer is a corporation, meet the net worth and
number of employee requirements of 28 U.S.C. sec. 2412(d)(2)(B)
(1994), as in effect on the date of the enactment of TRA 1986,
sec. 1551(h)(3), 100 Stat. 2085, 2753 (sec. 7430(c)(4)(A)(iii)).
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