John G. Goette, Jr. and Marian Goettee - Page 8

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         206 (2004); Minahan v. Commissioner, 88 T.C. 492, 497 (1987).                
         Respondent concedes that petitioners (1) exhausted available                 
         administrative remedies (sec. 7430(b)(1)) and (2) met the net                
         worth requirements (subpars. (A)(ii) and (D)(ii) of sec.                     
         7430(c)(4)).  Respondent contends that (1) petitioners are not               
         “the prevailing party” because (A) petitioners did not                       
         substantially prevail (sec. 7430(c)(4)(A)(i)) and (B)                        
         respondent’s position “was substantially justified” (sec.                    
         7430(c)(4)(B)(i)); (2) the amount of costs petitioners claim is              
         not reasonable (sec. 7430(a)(2)); and (3) petitioners                        
         “unreasonably protracted such proceedings” (sec. 7430(b)(3)).                
              In order to be entitled to an award of litigation costs, one            
         of the requirements is that petitioners have “substantially                  
         prevailed”.  Although in general the requirements for an award               
         are in the conjunctive, the substantially prevailed requirement              
         is satisfied if petitioners satisfy either one of two statutory              
         alternatives.                                                                
              We proceed to consider first whether petitioners                        
         substantially prevailed with respect to the most significant                 
         issue or set of issues presented (sec. 7430(c)(4)(A)(i)(II)), and            
         then whether petitioners substantially prevailed with respect to             
         the amount in controversy (sec. 7430(c)(4)(A)(i)(I)).                        
         A.  Most Significant Issue                                                   
              The parties have stipulated that they “agree that the most              






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