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To prevail, petitioners must show that respondent's position
in this case was not substantially justified. We conclude that
petitioners did not meet this requirement. Thus, we will deny
petitioners' motion.
In light of this conclusion, we need not decide respondent's
contentions that petitioners are not entitled to relief because
(1) they unreasonably protracted the proceedings, (2) the amount
of costs they claim is not reasonable, and (3) they did not pay
or incur the amounts claimed.
The parties have submitted affidavits and memoranda
supporting their positions. We decide the motion based on the
memoranda, affidavits, and exhibits attached to the affidavits.
The parties do not dispute the material facts in the affidavits
or the authenticity of the exhibits attached to the affidavits.
Respondent requested a hearing, but we conclude that a hearing is
not necessary to properly decide this motion. Rule 232(a)(3).
Unless otherwise indicated, section references are to the
Internal Revenue Code. All references to section 7430 are to the
section as amended by section 1551 of the Tax Reform Act of 1986,
Pub. L. 99-514, 100 Stat. 2752, and by section 6239(a) of the
1(...continued)
Memo. 1993-213, vacated and remanded 41 F.3d 103 (3d Cir. 1994),
and T.C. Memo. 1996-137. In those opinions, we decided whether,
for 1975, 1976, and 1977, petitioners failed to report
substantial amounts of income and whether they were liable for
the addition to tax for fraud.
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