Ted and Tammy Estes - Page 8

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               Section 7430 provides for the award of reasonable                      
          administrative and litigation costs to a taxpayer in an                     
          administrative or court proceeding brought against the United               
          States involving the determination of any tax, interest, or                 
          penalty pursuant to the Internal Revenue Code.  An award of                 
          administrative or litigation costs may be made where the                    
          taxpayer:  (1) Is the “prevailing party”; (2) exhausted available           
          administrative remedies;3 and (3) did not unreasonably protract             
          the administrative or judicial proceeding.  See sec. 7430(a),               
          (b)(1), (3).  The costs claimed must also be reasonable in                  
          amount.  See sec. 7430(c).  These requirements are conjunctive,             
          and failure to satisfy any one will preclude an award of costs to           
          petitioners.  See Minahan v. Commissioner, 88 T.C. 492, 497                 
               To be a “prevailing party”, the taxpayer must show that (1)            
          the taxpayer substantially prevailed with respect to the amount             
          in controversy or with respect to the most significant issue(s)             
          presented, and (2) the taxpayer satisfied the net worth                     
          requirement.  See sec. 7430(c)(4)(A).  If respondent establishes            
          that the position of the United States in the proceeding was                

          3  This requirement does not apply to an award for                          
          reasonable administrative costs.  See sec. 7430(b)(1).                      

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