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(i) which–-
(I) has substantially prevailed with
respect to the amount in controversy, or
(II) has substantially prevailed with
respect to the most significant issue or
set of issues presented, and
(ii) which meets the requirements of the
1st sentence of section 2412(d)(1)(B) of
title 28, United States Code (as in effect
on October 22, 1986) except to the extent
differing procedures are established by
rule of court and meets the requirements of
section 2412(d)(2)(B) of such title 28 (as
so in effect).
Section 7430(c)(4)(A)(ii) effectively limits the award of
litigation costs to parties with net worth of $2 million or
less.7 Stieha v. Commissioner, 89 T.C. 784, 790 (1987).
Consequently, to qualify as the prevailing party pursuant to
section 7430(c)(4), a party must, inter alia, (1) “substantially
prevail” with respect to either the amount in controversy or the
most significant issue or set of issues presented, and (2)
satisfy the $2 million net worth limitation. The taxpayer bears
the burden of proving that the foregoing two requirements have
been satisfied. Rule 232(e); Minahan v. Commissioner, 88 T.C.
492, 497 (1987).
Section 7430(c)(4)(B) provides the following exception to
7Rule 231(b)(4) requires that a motion for award of
reasonable litigation costs contain a statement, supported by an
affidavit of the moving party, that the moving party meets the
net worth requirement.
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Last modified: May 25, 2011