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conclude that petitioner was the prevailing party as defined by
section 7430(c)(4)(A).
B. Reasonableness of Costs Claimed
1. Amount of Costs Claimed
Section 7430 permits a taxpayer to recover both reasonable
administrative costs16 and reasonable litigation costs17. The
amount of reasonable attorney’s fees that we may award is limited
by statute and adjusted for cost of living.18 Sec.
7430(c)(1)(B)(iii) (and flush language). A taxpayer may recover
attorney’s fees in excess of the statutory limit in the presence
of one or more of the following special factors: (1) Limited
availability of qualified attorneys for the proceeding, (2)
16Sec. 7430(c)(2) defines reasonable administrative costs to
mean the expenses, costs, and fees described in sec.
7430(c)(1)(B) incurred on or after the earliest of the date of
the receipt by the taxpayer of the notice of decision of the
Appeals Office, the date of the notice of deficiency, or the date
on which the first letter of proposed deficiency that allows the
taxpayer the opportunity for administrative review by the Appeals
Office is sent.
17Sec. 7430(c)(1) defines reasonable litigation costs to
include, among other things, reasonable court costs and
reasonable fees paid or incurred for the services of attorneys in
connection with the court proceeding (attorney’s fees).
Attorney’s fees are limited by statute and adjusted for cost of
living. Sec. 7430(c)(1)(B)(iii) (and flush language).
18Rev. Proc. 2001-59, 2001-2 C.B. 623, 628; Rev. Proc. 2002-
70, 2002-2 C.B. 845, 850; and Rev. Proc. 2003-85, 2003-2 C.B.
1184, 1190, respectively, provide that, for fees incurred in
calendar years 2002-2004, the attorney fee award limitation under
sec. 7430(c)(1)(B)(iii) is $150 per hour.
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