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53.97 percent of the future lottery payments and his wife would
receive 46.03 percent. Petitioner and his wife were divorced in
December 1995. Petitioner reported $175,000 (i.e., one-half) of
the $350,000 lottery payment in his 1995 return.
B. The Notice of Deficiency
On August 2, 2000, respondent sent a notice of deficiency to
petitioner in which respondent determined that petitioner was
taxable on the entire $350,000 lottery payment in 1995.
Respondent also determined that petitioner failed to include all
of his interest income in 1995 and that petitioner was liable for
the addition to tax for failure to timely file his 1995 return.
C. Settlement of the Case
The parties settled the case before trial. Respondent
conceded the lottery payment issue, and petitioner conceded the
interest income and late filing issues.
Discussion
A. Motion for Litigation Costs: Background
To be entitled to an award for litigation costs, the
taxpayer must:
1. Exhaust administrative remedies. Sec. 7430(b)(1).
Respondent concedes that petitioner meets this requirement.
2. Substantially prevail with respect to the amount in
controversy. Sec. 7430(c)(4)(A)(i)(I). Respondent concedes that
petitioner meets this requirement.
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