2
section 74301 and Rule 231.2 Respondent concedes that petitioner
substantially prevailed, exhausted its administrative remedies,
meets the net worth requirements, and did not unreasonably
protract the administrative or Court proceedings. Sec.
7430(b)(1), (3), and (c)(4)(A)(i) and (ii). The remaining issues
for decision are:
(1) Whether respondent’s position in the underlying
proceeding was substantially justified. We hold that it was not.
(2) Whether a special factor as defined in section
7430(c)(1)(B)(iii) was present in this case which would justify
an award of attorney's fees higher than $110 per hour. We hold
that no special factor was present.
1 Section references are to the Internal Revenue Code in
effect for the years in issue. References to sec. 7430 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. 3743 (effective with respect to proceedings commenced
after Nov. 10, 1988). Sec. 7430 was further amended by the
Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 701, 110 Stat.
1463 (1996), effective with respect to proceedings commenced
after July 30, 1996. The amendments to that section shifted to
the Commissioner the burden of proving that the position of the
United States was substantially justified, sec. 7430(c)(4)(B),
and changed the hourly rate for attorney's fees to $110, sec.
7430(c)(1)(B)(iii).
A judicial proceeding is commenced in this Court with the
filing of a petition. Rule 20(a). Petitioner filed its petition
on Sept. 9, 1996. Accordingly, the 1996 amendments to sec. 7430
apply here. See Maggie Management Co. v. Commissioner, 108 T.C.
430 (1997).
2 Rule references are to the Tax Court Rules of Practice and
Procedure.
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