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(3) did not unreasonably protract the court proceeding. 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. 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
administrative costs under section 7430. Rule 232(e). Upon
satisfaction of these requirements, a taxpayer may be entitled to
reasonable costs incurred in connection with the administrative
or court proceeding. See sec. 7430(a)(1) and (2), (c)(1) and
(2).
To be a “prevailing party”, the 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) satisfy the applicable net worth requirement.
Sec. 7430(c)(4)(A). Respondent concedes that petitioner has
satisfied the requirements of section 7430(c)(4)(A). Petitioner
will nevertheless fail to qualify as the prevailing party if
respondent can establish that respondent’s position in the court
and administrative proceedings was substantially justified. Sec.
7430(c)(4)(B)(i).
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