Haas & Associates Accountancy Corporation - Page 19



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          litigation costs, the regulations exceed the statutory                      
          requirements of section 7430(b)(1).  Clearly, the regulations do            
          not impose any such absolute condition, and we have not so held.            
               In 1998, Congress provided under the qualified offer rule of           
          sections 7430(c)(4)(E) and (g) that a taxpayer may be deemed to             
          qualify as a prevailing party under section 7430(a) and (c)(4)              
          regardless of whether the taxpayer substantially prevailed in the           
          proceeding or of whether the position of respondent in the                  
          proceeding was substantially justified.  Internal Revenue Service           
          Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,           
          sec. 3101(e)(1) and (2), 112 Stat. 728.5                                    
               The qualified offer provisions apparently arose not from any           
          concern with the exhaustion-of-administrative-remedies                      
          requirement but with the frequent controversy over whether a                
          party qualifies as a prevailing party under section                         
          7430(c)(4)(A).  E.g., Corkrey v. Commissioner, 115 T.C. 366, 372-           
          373 (2000); McIntosh v. Commissioner, T.C. Memo. 2001-144; Gibson           
          v. Commissioner, T.C. Memo. 2001-74; Nguyen v. Commissioner, T.C.           
          Memo. 2001-41; Livingston v. Commissioner, T.C. Memo. 2000-387              
          (each of which involves the “no substantial justification”                  

          5  The qualified offer rules of sec. 7430(c)(4)(E) and (g) were             
          made effective for costs incurred after Jan. 22, 1999, 180 days             
          after July 22, 1998.  Internal Revenue Service Restructuring and            
          Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3101(g),               
          112 Stat. 729.  Respondent does not contend that any of the                 
          litigation costs for which petitioners herein seek recovery were            
          incurred before the Jan. 22, 1999, effective date of the                    
          qualified offer rule.                                                       





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