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petitioner received from the hospital in 1993 was taxable income
to him in 1993. We held that the guarantee payments petitioner
received were not includable in his income in 1993 because those
payments were a loan.
Discussion
Section 7430 provides for the award of administrative and
litigation costs to a taxpayer in an administrative or court
proceeding brought against the United States involving the
determination of any tax, interest, or penalty pursuant to the
Internal Revenue Code. An award of administrative or litigation
costs may be made where the taxpayer (1) is the “prevailing
party”, (2) exhausted available administrative remedies,3 (3) did
not unreasonably protract the administrative or judicial
proceeding, and (4) claimed reasonable administrative and
litigation costs. Sec. 7430(a), (b)(1), (3), and (c). These
requirements are conjunctive, and failure to satisfy any one will
preclude an award of costs to petitioners. Minahan v.
Commissioner, 88 T.C. 492, 497 (1987).
To be a “prevailing party” (1) the taxpayer must
substantially prevail with respect to either the amount in
controversy or the most significant issue or set of issues
presented, and (2) at the time the petition in the case is filed,
3 This requirement applies only to litigation costs. Sec.
7430(b)(1).
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Last modified: May 25, 2011