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amounts of administrative and litigation costs claimed by
petitioners are reasonable.
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,5 (3) did
not unreasonably protract the administrative or judicial
proceeding, and (4) claimed reasonable administrative and
litigation costs. Sec. 7430(a), (b)(1), (3), (c); Portillo v.
Commissioner, 988 F.2d 27, 28 (5th Cir. 1993). 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 was
filed, the taxpayer must meet the net worth requirements of 28
U.S.C. sec. 2412(d)(2)(B) (1994). Sec. 7430(c)(4)(A). A
5 This requirement applies only to litigation costs. Sec.
7430(b)(1).
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Last modified: May 25, 2011