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acknowledges that petitioners substantially prevailed both with
respect to the amounts in controversy and with respect to the
most significant issues, sec. 7430(c)(4)(A)(i), and respondent
acknowledges that Haas and his wife’s 1993 joint Federal income
tax liability is less than what it would have been under
petitioners’ qualified offer. Further, respondent acknowledges
that each petitioner meets the net-worth and number-of-employee
limitations of the Equal Access to Justice Act (EAJA), 28 U.S.C.
sec. 2412(d)(1) and (2)(B) (1994). Sec. 7430(c)(4)(A)(ii).
Respondent contends, however, that because petitioners did
not request an Appeals Office conference petitioners did not
exhaust their available administrative remedies and that
petitioners protracted the proceedings herein. Respondent also
contends that the litigation costs claimed by petitioners are
unreasonable and that Haas and his wife did not incur any
litigation costs (i.e., that essentially all litigation costs for
which recovery is sought were billed to Haas & Associates, not to
Haas and his wife).
Petitioners respond that during respondent’s audit
examination they did not provide respondent’s representatives
certain requested transaction documents because the documents did
not exist and that they did not protest respondent’s audit
adjustments and did not seek a conference with respondent’s
Appeals Office because there was insufficient time to do so under
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