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the parties advised the Court that their negotiations in this
regard had not been successful.
Discussion
We apply section 7430 as most recently amended by Congress
in the Internal Revenue Service Restructuring and Reform Act of
1998 (RRA 1998), Pub. L. 105-206, sec. 1301, 112 Stat. 685, 727.
However, certain of the amendments made by RRA 1998 to section
7430 (regarding the reasonableness of costs, the type of
recoverable costs, and other provisions that are not in issue
herein) apply only to costs incurred after January 18, 1999.
A. Requirements For a Judgment Under Section 7430
Under section 7430(a), a judgment for litigation costs
incurred in connection with a court proceeding may be awarded
only if a taxpayer: (1) Is the prevailing party, (2) has
exhausted his or her administrative remedies within the IRS, and
(3) did not unreasonably protract the court proceeding. See sec.
7430(a) and (b)(1), (3). Similarly, a judgment for
administrative costs incurred in connection with an
administrative proceeding may be awarded under section 7430(a)
only if a taxpayer: (1) Is the prevailing party, and (2) did not
unreasonably protract the administrative proceeding. See sec.
7430(a) and (b)(3).
A taxpayer must satisfy each of the respective requirements
in order to be entitled to an award of litigation or
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