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entitled to recover reasonable litigation costs. These
requirements are in the conjunctive; i.e., a taxpayer must
overcome each of these hurdles in order to succeed as to
litigation costs. Minahan v. Commissioner, 88 T.C. 492, 497
(1987). Respondent concedes that petitioners have satisfied all
of the requirements except for the one established by section
7430(c)(4)(B)(i), relating to whether the position of the United
States was substantially justified.7 As to this requirement, the
statute provides, in effect, that respondent has the burden of
proof. See, e.g., Maggie Management Co. v. Commissioner, 108
T.C. 430, 437-441 (1997).
Respondent contends that, as of the time respondent filed
the answer, (1) it was reasonable for respondent to require
petitioners to substantiate their claimed deductions, (2)
petitioners had not yet provided this substantiation, and (3)
thus it was reasonable at that time for respondent to take the
position that petitioners were not entitled to their claimed
deductions. Respondent contends--
At the time of the Answer, respondent’s administrative file
reflected that respondent’s Agent [Ward] was met with a set
of circumstances which required prompt action and that she
found herself confronted with an uncooperative
representative for petitioners.3 * * *
6(...continued)
(ii) the date of the notice of
deficiency.
7 To avoid disputes about minutiae and the potential of
ongoing costs in this Court, the parties have stipulated that if
we hold that petitioners are entitled to an award of litigation
costs, then the amount to be awarded, “exclusive of any
litigation costs that may be incurred with respect to an appeal
of this case and thereafter,” is $15,000.
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