Jerry and Patricia A. Dixon - Page 17




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          litigation costs incurred in a court proceeding brought by or               
          against the United States in connection with the determination,             
          collection, or refund of any tax, interest, or penalty under                
          Title 26.  Section 7430(c)(4) defines the term "prevailing party"           
          in pertinent part as any party in a proceeding referred to in               
          subsection (a) who has substantially prevailed with respect to              
          the amount in controversy or with respect to the most significant           
          issue or set or issues presented.  Section 7430(c)(4) also                  
          provides that the prevailing party's net worth must fall within             
          certain limitations.                                                        
               Petitioners do not qualify as prevailing parties within the            
          meaning of section 7430(c)(4).  Despite the Government misconduct           
          in the trial of the test cases, we have sustained virtually all             
          of respondent's deficiency determinations on the ground that the            
          Government misconduct amounted to harmless error.  Although we              
          sanctioned the Government by relieving petitioners of liability             
          for certain time-sensitive additions to tax under sections                  
          6653(a)(2) and 6653(a)(1)(B) and increased interest under section           
          6621(c), petitioners have not substantially prevailed with                  
          respect to either the amount in controversy or the most                     
          significant issue or set or issues presented.  See Bragg v.                 
          Commissioner, 102 T.C. 715, 719-720 (1994); Bowden v.                       
          Commissioner, T.C. Memo. 1999-30.  Consequently, petitioners do             








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