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provided the requested substantiation. Respondent then conceded
the depreciation and pruning costs deductions and settled the
cattle contribution issue. On February 23, 1998, the parties
filed a stipulation of settled issues, and on June 1, 1998,
petitioners filed a Motion for Award of Reasonable Litigation
Costs.
Discussion
We may award litigation costs to petitioners if they meet
the requirements of section 7430. Respondent concedes that
petitioners have substantially prevailed, met the net worth
requirements, and exhausted all administrative remedies. See
sec. 7430(a), (b)(1), (c)(4)(A). Thus, the remaining issues for
decision are whether: (1) Respondent's position was
substantially justified; (2) petitioners unreasonably protracted
the court proceedings; and (3) the litigation costs claimed by
petitioners are reasonable. See sec. 7430(a), (b)(3), (c)(1),
(c)(4)(B).
I. Substantial Justification
On August 21, 1997, and January 15, 1998, respondent filed
his answers and took the position that petitioners had not
substantiated and, thus, were not allowed the deductions for
depreciation, pecan tree pruning costs, and contributions of cash
and cattle. Respondent must prove that this position was
substantially justified. Sec. 7430(c)(4)(B). Respondent's
position was substantially justified if it had a reasonable basis
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