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Ray case, our research failed to locate any other cases
directly dealing with the issue currently in dispute.
In light of the Court’s recent decision in Ray, we have
reconsidered our position and we are conceding the case
in full.
OPINION
A taxpayer who is a prevailing party in an administrative or
court proceeding is entitled to an award of reasonable litigation
and administrative costs incurred in such proceedings. Sec.
7430(a). To be a “prevailing party”, a taxpayer must establish
that: (1) The position of the United States in the proceeding
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) the
taxpayer met the net worth requirements of 28 U.S.C. sec.
2412(d)(2)(B) (1994) on the date the petition was filed. Sec.
7430(c)(4)(A). Additionally, the taxpayer must also establish
that all available administrative remedies have been exhausted
insofar as litigation costs are concerned, sec. 7430(b)(1); that
the taxpayer has not unreasonably protracted the administrative
or judicial proceedings, sec. 7430(b)(4); and that the costs
claimed are reasonable in amount, sec. 7430(c)(1) and (2).
All of the foregoing requirements must be satisfied. Minahan v.
Commissioner, 88 T.C. 492, 497 (1987).
In response to petitioners' motion, respondent argues: (1)
That petitioners are not prevailing parties because the position
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