Robert M. and Paulette G. Maddox - Page 2

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                                        MEMORANDUM OPINION                                              
                  CHABOT, Judge:  This matter is before us on petitioners’                              
            motion for an award of litigation costs1 pursuant to section                                
            74302 and Rule 231.3                                                                        
                  The issue for decision is whether respondent’s position in                            
            the instant case was substantially justified, within the meaning                            
            of section 7430(c)(4)(B)(i).                                                                
                  Neither side has requested a hearing, and we conclude that a                          
            hearing is not necessary.  Rule 232(a).  Accordingly, we decide                             
            petitioners’ motion on the basis of the parties’ stipulations,                              
            stipulated exhibits, and briefs filed in connection with                                    
            petitioners’ motion, and the other documents in the Court’s                                 
            record in the instant case.                                                                 


                  1     Although petitioners refer to “administrative” costs at                         
            a few places in their brief, it is evident from the language in                             
            their motion and from the exhibit describing their counsel’s work                           
            that their motion does not deal with costs paid or incurred                                 
            before their counsel began to work on the petition herein.  From                            
            the foregoing, we conclude that petitioners’ references to                                  
            administrative costs are inadvertent and that our proceedings                               
            relate only to litigation costs.                                                            
                  2     Unless indicated otherwise, all section references are                          
            to sections of the Internal Revenue Code of 1986, as in effect                              
            for the years in issue.  References to sec. 7430 are to that                                
            section as in effect for proceedings commenced at the time the                              
            petition in the instant case was filed.  Because the petition was                           
            filed on Sept. 26, 1996, the amendments made by title VII of the                            
            Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 701, 110 Stat.                             
            1452, 1463 (1996), effective after July 30, 1996, apply to the                              
            instant case.  See Maggie Management Co. v. Commissioner, 108                               
            T.C. 430, 438-441 (1997).                                                                   
                  3     Unless indicated otherwise, all Rule references are to                          
            the Tax Court Rules of Practice and Procedure.                                              



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