-3-
By statutory notice of deficiency dated August 29, 1994,
respondent determined a deficiency in petitioner's income tax for
1988 of $98,917, and additions to tax under sections 6651(a)(1)
and 6654(a) of $24,729 and $6,326, respectively. The deficiency
was based on respondent's determination that petitioner had
capital gain from the sale of his principal residence in
Livermore, California, because he failed to establish how much of
the 51 acres of the new property, which he purchased in Clayton,
California, was used by him as his principal residence.
In Schlicher I, we held that petitioner used only 7-1/2 of
the 51 acres of the Clayton property for business, that the
remaining land was used as his principal residence, and therefore
that his investment in the latter qualified for nonrecognition
treatment under section 1034(a).
Thereafter, on February 24, 1997, petitioner filed a motion
for award of reasonable litigation costs (motion).
Discussion
For this Court to award reasonable litigation costs under
section 7430,3 several requirements must be met. The record must
3 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). Section 7430 was amended most
recently by the Taxpayer Bill of Rights 2 (TBOR-2), Pub. L. 104-
168, sec. 701, 110 Stat. 1452, 1463-1464 (1996), effective with
(continued...)
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