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Rules of Practice and Procedure. Neither party has requested a
hearing on petitioners' motion. Accordingly, we rule on
petitioners' motion on the basis of the parties' submissions and
the record in the instant case as a whole. We incorporate by
reference herein the portions of our opinion on the merits in the
instant case, Phillips v. Commissioner, T.C. Memo. 1997-128, that
are relevant to our disposition of the motion.
On March 11, 1997, we issued our opinion on the substantive
issues in the instant case. We found that petitioners engaged in
their horse activity for profit and, accordingly, held that
petitioners were entitled to deduct their horse activity expenses
in excess of activity income for the years in issue.
Generally, section 7430(a) provides for the award of
reasonable administrative and litigation costs to a taxpayer who
is a prevailing party in an administrative or court proceeding
brought against the United States involving the determination of
any tax, interest, or penalty pursuant to the Code. 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) as pertinent to the instant matter, 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). Additionally, an award of litigation
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