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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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