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The final issue involved petitioner’s treatment of the
canceled nonrecourse debt. On September 8, 1999, Mr. Tkacik
informed Mr. Battagline that respondent was now treating the
matter as a taxable exchange under section 1001 and that
respondent therefore needed documentation regarding petitioner’s
basis in the property. On November 29, 1999, Mr. Battagline
contacted Mr. Tkacik, stating that the required documentation
would be furnished. Mr. Tkacik received the documentation on
January 6, 2000. After an initial disagreement over the tax
treatment of the exchange and on the basis of additional
information received by respondent on February 18, 2000,
respondent conceded the case on February 24, 2000. On April 14,
2000, the parties filed a stipulation of settlement. On the same
date, petitioner’s motion for litigation costs of $15,778.29 was
filed.
OPINION
Section 7430 provides that, in any court proceeding brought
by or against the United States, the “prevailing party” may be
awarded reasonable litigation costs if the “prevailing party”
establishes that he exhausted the administrative remedies
available within the Internal Revenue Service and did not
unreasonably protract the proceedings. See sec. 7430(b)(1), (3).
For petitioner to qualify as a “prevailing party” for purposes of
section 7430, it must be established that: (1) The position of
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