Michele D. Livingston - Page 7




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          or penalty under the Internal Revenue Code.  An award of                      
          reasonable administrative or litigation costs may be made where               
          the taxpayer is the prevailing party and did not unreasonably                 
          protract the administrative or judicial proceedings.  See sec.                
          7430(a) and (b)(3).  Litigation costs may be awarded only if the              
          taxpayer exhausted available administrative remedies.  See sec.               
          7430(b)(1).                                                                   
          To be a prevailing party, a taxpayer must:  (1)                               
          Substantially prevail with respect to either the amount in                    
          controversy or the most significant issue or set of issues                    
          presented, and (2) meet certain net worth requirements.  See sec.             
          7430(c)(4)(A)(i) and (ii).                                                    
               Respondent concedes that petitioner substantially prevailed              
          and meets the net worth requirements.  Respondent argues,                     
          however, that petitioner is not the prevailing party because                  
          respondent was substantially justified in maintaining his                     
          position in the administrative and judicial proceedings.                      
          Respondent also argues that petitioner did not exhaust all                    
          administrative remedies, that petitioner unreasonably protracted              
          the proceedings, and that the fees requested are unreasonable.                
               As a general rule, the taxpayer in an administrative or                  
          court proceeding is not treated as the prevailing party if                    
          respondent establishes that the position of the United States was             
          substantially justified.  See sec. 7430(c)(4)(B)(i).  Pursuant to             






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Last modified: May 25, 2011