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litigation costs if the taxpayer establishes that he or she is
the prevailing party, has exhausted administrative remedies, has
not unreasonably protracted the court proceedings, and has
claimed reasonable litigation costs.5 Sec. 7430(a), (b)(1), (3),
(c)(4). A taxpayer bears the burden to prove that he or she
satisfies these requirements. Rule 232(e); Corson v.
Commissioner, 123 T.C. 202, 205-206 (2004).
Prevailing Party
To be a prevailing party, the taxpayer must substantially
prevail with respect to either the amount in controversy or the
most significant issue or set of issues presented, and must
satisfy the net worth requirements. See sec. 7430(c)(4)(A); 28
U.S.C. sec. 2412(d)(2)(B)(2000). The taxpayer will not be
treated as a prevailing party, however, if the Commissioner’s
position in the court proceeding was substantially justified.
Sec. 7430(c)(4)(B). The Commissioner has the burden to prove
that his position was substantially justified. See sec.
7430(c)(4)(B)(i); Rule 232(e).
Respondent concedes that petitioner substantially prevailed
and met the net worth requirements. See sec. 7430(b) and
(c)(4)(A). Respondent contends, however, that petitioner is not
5Respondent concedes that petitioner did not unreasonably
protract proceedings. See sec. 7430(b)(3).
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Last modified: May 25, 2011