Jung Sik and Bok S. Lim - Page 4




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          the administrative or judicial proceeding.  Sec. 7430(a), (b)(1),           
          (3).                                                                        
               To be a “prevailing party”, a taxpayer must (1)                        
          substantially prevail with respect to either the amount in                  
          controversy or the most significant issue or set of issues                  
          presented, and (2) meet the net worth requirements of 28 U.S.C.             
          section 2412(d)(2)(B).  See sec. 7430(c)(4)(A)(i) and (ii).  A              
          taxpayer will not be treated as a prevailing party, however, if             
          the United States established that its position was substantially           
          justified.  See sec. 7430(c)(4)(B).                                         
          B.  Substantial Justification                                               
               As we stated earlier, respondent concedes that petitioner              
          substantially prevailed and met the net worth requirements.                 
          Moreover, respondent concedes that his position after the                   
          calendar call on May 18, 1998, was not substantially justified.             
          The parties primarily dispute at what point in the litigation               
          proceedings respondent’s position was no longer substantially               
          justified.                                                                  
               Petitioners contend that respondents’ position was not                 
          substantially justified from the time of the issuance of the                
          notice of deficiency.  Accordingly, petitioners claim legal                 
          expenses for the period beginning with the preparation and filing           
          of their petition.  Respondent asserts that his position was                







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