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costs may be made only where a taxpayer has exhausted available
administrative remedies, sec. 7430(b)(1), and no award of costs
may be made with respect to any portion of an administrative or
judicial proceeding that the taxpayer has unreasonably
protracted, sec. 7430(b)(4). Moreover, the costs claimed must be
reasonable in amount. Sec. 7430(c).
Petitioners bear the burden of proving that each of the
foregoing requirements has been satisfied.1 Rule 232(e). The
requirements are conjunctive, and failure to prove any one will
preclude an award of costs to petitioners. Minahan v.
Commissioner, 88 T.C. 492, 497 (1987).
Respondent contends that petitioners have not shown that the
position of the United States was not substantially justified and
that the amount of attorney's fees claimed is reasonable.
Respondent concedes that petitioners have satisfied the other
1 References to sec. 7430 in this opinion are to that section
as amended by sec. 1551 of the Tax Reform Act of 1986, Pub. L.
99-514, 100 Stat. 2752 (effective for proceedings commenced after
Dec. 31, 1985), and by sec. 6239(a) of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat.
3342, 3743-3746 (effective with respect to proceedings commenced
after Nov. 10, 1988). Sec. 7430 was amended by the Taxpayer Bill
of Rights 2 (TBR2), Pub. L. 104-168, sec. 701, 110 Stat. 1452,
1463-1464 (1996), effective with respect to proceedings commenced
after July 30, 1996. The amendments to the section place on the
Commissioner the burden of establishing that the position of the
Commissioner was substantially justified. Sec. 7430(c)(4)(B). A
judicial proceeding is commenced in this Court with the filing of
a petition. Rule 20(a). Petitioners filed their petition on May
30, 1995. Accordingly, the amendments to sec. 7430 enacted by
TBR2 do not apply here. Maggie Management Co. v. Commissioner,
108 T.C. 430 (1997); Schlicher v. Commissioner, T.C. Memo. 1997-
163; Sicard v. Commissioner, T.C. Memo. 1996-476.
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