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authorized to award reasonable administrative costs. See TAMRA
sec. 6239(d), 102 Stat. 3746. Despite the amendment, cases
arising pursuant to the pre-amended statute are persuasive in
deciding whether a taxpayer is entitled to a stand-alone claim of
administrative costs, such as the instant case. See, e.g.,
McWilliams v. Commissioner, 104 T.C. 320 (1995); Gustafson v.
Commissioner, supra (citing cases decided under prior law).
A decision for administrative costs incurred in connection
with an administrative proceeding may be awarded under
section 7430(a) only if a taxpayer: (1) Is the "prevailing
party", (2) did not unreasonably protract the administrative
proceeding, and (3) claimed reasonable administrative costs. See
sec. 7430(a), (b)(3), and (c). A taxpayer must satisfy each of
the respective requirements in order to be entitled to an award
of administrative costs pursuant to section 7430. See Rule
232(e).
To be a prevailing party, the taxpayer must substantially
prevail with respect to either the amount in controversy or the
most significant issue or set of issues presented and satisfy the
applicable net worth requirement. See sec. 7430(c)(4)(A).
A taxpayer, however, is not a prevailing party if the
Commissioner can establish that the Commissioner's position in
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Last modified: May 25, 2011