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By letter dated April 11, 1996, respondent asked petitioners
to respond to the proposed disallowance of the alimony deductions
claimed by petitioners on their 1994 return.
In a letter to respondent dated April 30, 1996, Mr. Read
invited respondent's attention to his arguments previously made
regarding the identical alimony issue raised regarding
petitioners' 1993 tax year and cited to respondent this Court's
then recent opinion in Ambrose v. Commissioner, T.C. Memo. 1996-
128.
A statutory notice of deficiency for 1994 was mailed to
petitioners on May 23, 1996. In response, petitioners timely
filed a petition in this Court at docket No. 17884-96, on August
19, 1996. A Stipulation of Settled Issues was filed on April 4,
1997, in which respondent conceded the case.
Discussion
A taxpayer who substantially prevails in an administrative
or court proceeding may be awarded reasonable costs incurred in
those proceedings. Sec. 7430(a). To be a "prevailing party", a
taxpayer must show that: (1) The position of the United States
in the proceeding was not substantially justified,2 (2) the
taxpayer substantially prevailed with respect to either the
amount in controversy or the most significant issue or issues
2 Because the petition in docket No. 17884-96 was filed
after July 30, 1996, in that case the burden is on respondent to
show that the Government's position was substantially justified.
Taxpayer Bill of Rights 2 (TBR2), Pub. L. 104-168, secs. 701-704,
110 Stat. 1452, 1463-1464 (1996). See Maggie Management Co. v.
Commissioner, 108 T.C. 430 (1997). Our holding, however, does
not depend on which party has the burden.
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