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prevailing party; (2) have exhausted available administrative
remedies; (3) not have unreasonably protracted the court
proceeding; and (4) show that the costs claimed are reasonable
litigation costs incurred in connection with the court
proceeding. Sec. 7430(c)(4), (b)(1), (b)(4), (a)(2). The
taxpayers have the burden of establishing that all the foregoing
criteria have been satisfied. See Rule 232(e); Maggie Management
Co. v. Commissioner, 108 T.C. 430 (1997).
Both petitioners and respondent agree that all the
administrative remedies available within the Internal Revenue
Service have been exhausted. There is some dispute, however, as
to the other requirements of section 7430.
Prevailing Party
To be a "prevailing party", a taxpayer must establish: (1)
The taxpayer substantially prevailed with respect to either the
amount in controversy or the most significant issue or set of
issues presented; (2) the position of the United States was not
substantially justified; and (3) the taxpayer met the net worth
requirements of 28 U.S.C. section 2412(d)(2)(B) (1994) at the
time the petition was filed. Sec. 7430(c)(4).
Respondent concedes that petitioners meet the net worth
requirements. Therefore, we need examine only the question of
whether petitioners substantially prevailed with respect to the
amount in controversy or the most significant issue or issues
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