§2412

2015-231, we held that R failed to meet his burden ofproofto establish that P was liable under I.R.C. sec. 6901 as a transferee for Alterman Corp.'s 2003 income tax liability. P, a trust whose case was consolidated with other cases for purposes ofthat opinion, has moved for an award ofadministrative and litigation costs under I.R.C. sec. 7430. Generally, individual taxpayers seeking costs must have a net worth of$2 million or less at the time the civil action was filed, as required by 28 U.S.C.

We hold that section 7491(a)(1) does not shift the burd(:n ofproofto respondent.

Respondent also.contends that if we hold that petitioners are entitled to litigation and administrative costs, petitioners are not entit:led to the amount claimed.

Pursuant to EAJA and the TEFRA partnership rules, we hold that first-tier partners that meet the net worth requirements are eligible to receive an award.

§ 2412(d)(1)(B), (2)(B) (as in effect on Oct. 22, 1986). Respondent alleges the record does not establish that OPLP or OPLLC has met the net worth limitations. We agree. Accordingly, section 7491(a) does not apply. See H.R. Rep. No. 105-599, at 240, 242 (1998) (Conf. Rep.), reprinted in 1998-3 C.B. 747, 994, 996 (stating that the taxpayer has the b

2412 (2018), not under section 7430. The facts in that case, involving as they did a person who was erroneously placed on the “No Fly” list, handcuffed at an airport while recovering from surgery, and barred from returning to the United States for more than 10 years, are far different from those in this case. See Ibrahim, 912 F.3d at 1154. Mor

Sec. 7491(a)(2). Petitioners argue that section 7491 shifts the burden of proof to respondent with respect to the underpayment of tax. Respondent argues that section 7491 does not apply because petitioners have not shown that they maintained proper records or that they cooperated with respondent during the examinations. We find

Sec. 7491(a)(2). Petitioners argue that section 7491 shifts the burden of proof to respondent with respect to the underpayment of tax. Respondent argues that section 7491 does not apply because petitioners have not shown that they maintained proper records or that they cooperated with respondent during the examinations. We find

2412(d)(1)(B) and (2)(B) (as in effect on Oct. 22, 1986). Petitioner has not alleged, and the record does not establish, that SMP or Corona meets these requirements. Accordingly, section 7491(a) does not apply. See H. Conf. Rept. 105-599, at 240, 242 (1998), 1998-3 C.B. 747, 994, 996 (stating that the taxpayer has the burden of proving it meet

2412(d)(2)(B) (1988). Petitioners meet this requirement. 4. Not unreasonably protract the proceedings. Sec. 7430(b)(3). Respondent concedes that petitioners meet this requirement. 5. Establish that the amount of costs and attorney’s fees claimed are reasonable. Sec. 7430(a), (c)(1). Respondent concedes that the number of attorney hours and oth

section 2412 (1994), and sections 7430 and 6673(a)(2)(B), Messrs. Izen and Jones asked the Court for an award of attorney's fees and costs to their clients. Relying on Fed. R. Civ. P. 11, Tax Court Rule 230, and section 6673(a)(2)(B), Messrs. Izen and Jones also contended that the Court should impose sanctions against respondent in an amount not le

2412(d)(2)(B) (1984). See sec. 7430(c)(4)(A)(i) and (ii). A taxpayer will not be treated as a prevailing party, however, if the United States establishes that its position was substantially justified. See sec. 7430(c)(4)(B). As we stated earlier, respondent concedes that petitioners substantially prevailed and met the net worth requirements. T

2412 (1994) (as in effect on Oct. 22, 1986), entitled “Costs and fees”, section 7430(c)(4)(D) has no connection with, and is not incorporated by, the provisions governing our review of abatements. - 6 - The statute clearly provides otherwise. Section 6404(i) grants Tax Court jurisdiction over abatement review actions brought by taxpayers meet

2412(d)(2)(B) (1988). Respondent concedes that petitioner meets this requirement. 8 This requirement does not apply to an award for reasonable administrative costs. Sec. 7430(b)(1). 11 4. Show that the taxpayer did not unreasonably protract the proceedings. Sec. 7430(b)(3). Respondent concedes that petitioner meets this requirement. 5. Establ

2412(d)(2)(B) (1988). Respondent concedes that petitioners meet this requirement. 4. Show that the position of the United States in the action was not substantially justified. Sec. 7430(c)(4)(A)(i). 2 This requirement does not apply to an award for reasonable administrative costs. Sec. 7430(b)(1). - 7 - Respondent contends, and we hold, that

2412(d)(2)(B) (1988). Respondent concedes that petitioner meets this requirement. d. Show that the position of the United States in the action was not substantially justified. Sec. 7430(c)(4)(A)(i). Respondent contends and we hold that petitioner does not meet this requirement. e. Establish that the amount of costs and attorney's fees claimed

Petitioners do not argue that section 7491(a)(1) shifts the burden of proof to respondent in this case. In addition, petitioners have not established (nor do we find) that they satisfied the requirements of section 7491(a)(2). We hold that section 7491(a)(1) does not shift the burden of proof to respondent. See Goosen v. Commissio

2412(d)(2)(B) (1988). Respondent concedes that petitioners met this requirement. (7) The amount of costs claimed is reasonable. Sec. 7430(a), (c)(1) and (2). Respondent challenges the reasonableness of petitioners' claimed costs. On the basis of amended sec. 7430 to place on the Commissioner the burden of proving that her position in the admin

Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551, 100 Stat. 2752; H. Conf. Rept. 99-841, at II-801 (1986), 1986-3 C.B. (Vol. 4) 801. This Court has held that the substantially justified standard does not represent a departure from the reasonableness standard. Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Ci

Respondent concedes that petitioner meets this requirement. (e) Establish that the amount of costs and attorney's fees claimed by petitioner is reasonable. Sec. 7430(a), (c)(1). - 7 - Respondent concedes that petitioner meets this requirement. A taxpayer has the burden of proving that it meets each requirement before the Court

§ 2412(d)(2)(B) (cross-referenced by § 7430(c)(4)(A)(ii)). The taxpayer bears the burden of proving that these requirements for shifting the burden of proof have been met. See Rolfs v. Commissioner, 135 T.C. 471, 483 (2010), aff’d, 668 F.3d 888 (7th Cir. 2012). Petitioners argue that the burden of proof should be shifted to the IRS on only one issu

The EAJA, using wording similar, though not identical, to that found in section 7430, provides that a court “shall award [fees and other expenses] to a prevailing party” - 13 - [*13] in any case “brought by or against the United States * * *, unless the court finds that the position of the United States was substantially justified”. 28

A position has a reasonable basis in fact ifthere is relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Corkrey v. Commissioner, 115 T.C. 366, 373 (2000) (citing Underwood, 487 U.S. at 564-565). In determining whether the position ofthe Commissioner was substantiallyjustified, we must consi

2412(d)(2)(A)(ii)).5 Because petitioner's argument is clearly rooted in the 5 "The reasoning employed by the courts under the attorney's fee provision ofthe Equal Access to Justice Act (EAJA) applies equally to review under section (continued...) - 12 - [*12] undesirability ofthe case, we reject petitioner's assertion that it is a factor supp

A position has a reasonable basis in fact ifthere is relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Corkrey v. Commissioner, 115 T.C. 366, 373 (2000) (citing Pierce, 487 U.S. at 564-565). In determining whetherthe position ofthe Commissioner was substantiallyjustified, we must consider

2412 (a fee-shifting statute under the Equal Access to Justice Act (EAJA)). Like section 7430, the EAJA fee-shifting statute provides that a prevailing party may seek ajudgment for attorney's fees. Equal Access to Justice Act, 28 U.S.C. sec. 2412(b) ("[A] court may award reasonable fees and expenses ofattorneys * * * to the prevailing party in

2412(d)(2)(B) (2006); Hinck v. United States, 550 U.S. 501, 503-505 (2007). Petitioners failed to establish that we havejurisdiction to review respondent's interest abatement denial. See.e Patz Trust v. Commissioner, 69 T.C. 497, 503 (1977) ("Petitioners have the burden ofproving that this Court hasjurisdiction."). At the time that petitioners

2412(d)(1)(B), incorporated by reference in section 7430(c)(4)(A)(ii). But even ifa taxpayer substantiallyprevails for purposes ofsection 7430, the taxpayerwill not be treated as the prevailing party if the Commissioner establishes that the "position ofthe United States" was substantiallyjustified. Sec. 7430(c)(4)(B)(i); Rule 232(e). A positio

h Estate ofKunze v. Commissioner, T.C. Memo. 1999-344. Respondent also contends that we should disregard the affidavits and net worth statements ofpetitioners as unreliable. Respondent acknowledges that in the case ofa husband and wife, the net worth test is applied to each separately. h Hong v. Commissioner, 100 T.C. 88, 91 (1993). R

2412(d)(2)(B)), a party must have a net worth ofless than $2 million. The parties have stipulated "that Petitioners satisfythe requirements referredto in I.R.C. § 7430(c)(4)(A)(ii) for purposes of § 6404(h)(1)." - 18 - [*18] Congress intended abatement ofinterest only where the failure to do so 'would be widely perceived as grossly unfair.'"

2412(d)(1)(B), see sec. 7430(c)(4)(A)(ii); and (2) substantiallyprevail with respect to the amount in controversy, sec. 7430(c)(4)(A)(i)(I). Respondent concedes that petitioners meet the net worth requirements. Respondent also concedes that petitioners have substantially prevailed with respect to the amount in controversy. However, even ifa ta

See Estate of Kunze v. Commissioner, T.C. Memo. 1999-344. Respondent also contends that we should disregard the affidavits and net worth statements of petitioners as unreliable. Respondent acknowledges that in the case of a husband and wife, the net worth test is applied to each separately. See Hong v. Commissioner, 100 T.C. 88, 91 (1

See sec. 7430(c)(4)(A). A party meeting these requirements shall not be treated as the prevailing party, however, if the United States establishes that its position in the proceeding was substantially justified. ' Sec. 7430(c)(4)(B). - 4 - [*4] In order to establish that the position was substantiallyjustified, respondent must

1.461-1(a)(2), Income Tax Regs.; see also Interex, Inc.

2412(d)(2)(B) (2006), sec. 7430(c)(4)(A)(ii).15 In order to qualify for an award ofadministrative costs under section 7430(a)(1), the prevailing party must not have unreasonablyprotracted the administrative 14Respondent's failure to respond to petitioner's request for administrative costs is treated as a denial ofpetitioner's request for admin

See sec. 7430(c)(4)(A). A party meeting these requirements shall not be treated as the prevailing party, however, if the United States establishes that its position in the proceeding was substantially justified. ' Sec. 7430(c)(4)(B). - 4 - [*4] In order to establish that the position was substantiallyjustified, respondent must

2412(d)(2)(B)). Conversely, a taxpayer may not deduct either a prepaid amount or an amount paid without a legal obligation to do so any earlier than the taxable year in which such amount is incurred. Sec. 1.446-l(c)(ii)(B), Income Tax Regs. Accordingly, we need not consider the amount and timing of payments .petitioner actually made with respe

A position has a reasonable basis in fact ifthere is relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Corkrey v. Commissioner, 115 T.C. 366, 373 (2000)(citing Pierce, 487 U.S. at 564-565). In determining whether the - 10 - [*10] position ofthe Commissioner was substantiallyjustified, we

2412(d)(2)(B), sec. 7430(c)(4)(A)(ii).i° In order to qualify for an awardunder sebtion 7430(a),vthe;prevailingparty must (1) have exhaustedsthe available admin isträtive remedies; secr7430(b)(1%and (2) not have unreasonably protracted the court proceeding, seb 7430(b)(3) The party seeking an award under section 7430(à) has the burden ofestabli

2412(d)(2)(B),6 and (3) the Commissioner's position in the court proceeding was 6Respondent does not dispute that petitioner meets the net worth requirement. - 8 - not substantiallyjustified. Sec. 7430(c)(4)(A) and (B)(i); see also sec. 301.7430- 5(a), Proced. & Admin. Regs. The taxpayer has the burden ofproving that she substantiallyprevaile

See sec. 7430(c)(4)(A)(ii). - 6 - and penalty. The deficiency respondent determined with respect to petitioners' 2007 Federal income tax is $10,438 and the accuracy-related penalty he determined is $2,088. Pursuant to the stipulation, there is due from petitioners a deficiency of $5,950 and a penalty of$1,190. Respondentargues

2412(d) (2) (B); and (3) the Commissioner's position in the court proceeding was not substantially justified. Sec. 7430 (c) (4) (A) and (B) (i); see also sec. 301.7430-5(a), Proced. & Admin. Regs. The Commissioner bears the burden of proving that his position was substantially justified. Sec. 7430 (c) (4) (B) (i); Corson v. Commissioner, supra

To qualify under section 7430, the taxpayers must establish that they : (1) Were the prevailing party within the meaning of section 7430(c)(4) ; (2) exhausted the applicable administrative remedies ; (3) did not unreasonably protract the proceedings ; and (4) have claimed costs that are reasonable .

2412 (d)(2)(B) .and_Rule 231(b)( 4) by filing and signing an affidavit -attesting,that on September 24, 2004, her net worth did not exceed $2 million . Respondent does not dispute the substance of the -.affidavit. -Accordingly , we conclude that-petitioner. has - -satisfied the net .-worth requirement . C. The "Not Substantially Justified" Req

section 2412(d)(2)(B) at the time he filed the petition . Sec . 7430(c)(4)(A) . . A taxpayer shall not be treated as a prevailing party if the IRS establishes that the Government's position in the proceeding was substantially justified . Sec . 7430(c) (4) (B) . Respondent concedes all requirements for petitioners to qualify for an award of litigati

2412 (2006), and many of the scores of other specifically targeted Federal prevailing party statutes also incorporate the term “incurred” in their requirements for an award of fees and expenses to the prevailing party. We begin the analysis by observing what prevailing party statutes and sanctioning statutes have in common. The prevailing part

2412(d)(2)(B) (2000). - 20 - Petitioner has filed affidavits averring that her net worth was less than $2 million at the time her amended petitions were filed as well as when the original petitions were filed. We find petitioner’s submissions to be credible, and respondent has offered no evidence to contradict petitioner’s statements. Accordi

2412(d)(2)(B) (net worth requirements), sec. 7430(c)(4)(A)(ii). In order to qualify for an award under section 7430(a), the prevailing party must (1) have exhausted the available adminis- trative remedies, sec. 7430(b)(1), and (2) not have unreasonably protracted the court proceeding, sec. 7430(b)(3). The party moving for an award under sectio

2412(d)(2)(B) (2000). - 20 - Petitioner has filed affidavits averring that her net worth was less than $2 million at the time her amended petitions were filed as well as when the original petitions were filed. We find petitioner’s submissions to be credible, and respondent has offered no evidence to contradict petitioner’s statements. Accordi

section 2412(d)(2)(B)(2000). Sec. 7430(c) (4) (A). The taxpayer will evertheless not be treated as a prevailing party if the Commissioner's position in the court proceeding was substantially justified. Sec. 7430(c)(4) (B). The Commissioner has the burden of proving that his position was substantially justified. See sec. 7430(c) (4) (B)(i); Rule 232

section 2412(d)(2)(B) (2000). Sec. 7430(c)(4)(A). Even if the taxpayer satisfies all of the stated requirements, the taxpayer shall not be treated as a prevailing party if the Commissioner’s position in the court proceeding was substantially justified. Sec. 7430(c)(4)(B). The Commissioner has the burden of proving that his position was substantiall

2412(d) (2)(B) (2000). The taxpayer will not be treated as a prevailing party, however, if the Cdmmissioner's position in the:court proceeding was substantially justified. Sec. 7430(c) (4)(B). The Commissioner has the budden to prove that his position was substantially justified. See sec. 7430(c) (4) (B)(i); Rule 232(e). Respondent concedes th

2412(d) (2) (B). Sec. 7430(c)(4)(A). The taxpayer bears the burden of proving that these requirements are met. Rule 232(e). Even if the.taxpayer satisfies all of the stated requirements, section 7430(c) (4)(B) expressly provides that a taxpayer shall not be treated as the - 9 - prevailing party if the Commissioner establishes his position was

2412(d) (2) (B) (2000) at the time his petition was filed. Sec. 7430(c)(4) (A)(ii); Rule 231. Petitioner has since filed an affidavit with supporting exhibits that show his net worth was $17,221 at the time his petition was filed. We find that petitioner meets the net worth requirements of sec. 7430(c)(4) (A)(ii). - 6 - A qualified offer is d

2412(d)(2)(B)(i) (1988) (individual net worth limitation contained in the Equal Access to Justice Act (EAJA) and incorporated by reference in sec. 7430(c)(4)(A)(ii)). Reasonable attorney’s fees may not exceed the rate of $125 per hour (as adjusted for inflation) unless “a special factor, such as the limited availability of qualified attorneys

2412 (2000),10 the language of which closely resembles the relevant language of section 7430(c)(1), at least two District Court opinions have awarded pro 9 The Freedom of Information Act, 5 U.S.C. sec. 552(a)(4)(E) (2000), provides: The court may assess against the United States reasonable attorney fees and other litigation costs reasonably in

Sec. 7491(a)(2)(A)-(C). First, petitioners have not presented credible evidence that the payments by RAF of the Lenzens’ personal expenses were repayments of loans Mr. Lenzen made to RAF. The only evidence petitioners presented regarding the existence of the loans was an illegible copy of a ledger and testimony that the loans we

2412(d)(2)(B) (2000). Neither petitioner has made such a showing. -30- independent lender, see Scriptomatic, Inc. v. United States, 555 F.2d 364 (3d Cir. 1977). The more a transfer appears to result from an arm’s-length transaction, the more likely the transfer will be considered debt. See Bayer Corp. v. Mascotech, Inc. (In re Autosytle Plast

2412 (1988)); Swanson v. Commissioner, 106 T.C. 76, 86 (1996). A reasonable basis exists if legal precedent substantially supports the Commissioner’s position given the facts available to the Commissioner. Coastal Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 688 (1990). In deciding whether the Commissioner acted reasonably, this Cour

inued) (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 * * * (B) Exception if United States establishes that its position was substantially justified.-- (i) General rule.--A party shall not be treated as the prevailing party in a proceeding to which s

A principal reason for the enactment of sec. 7430 was to extend the relief afforded by EAJA to proceedings in this Court so that "one set of rules * * * [would] (continued...) - 42 - Petitioners reliance on Stieha v. Commissioner, supra, is misplaced. In that case, after this Court issued a dispositive decision that caused the Co

2412(d) (2) (B) (2000). Generally, before respondent's examination office and Appeals Office, taxpayers have the burden of proving their entitlement to claimed expenses and losses. Norgaard v. Commissioner, 939 F.2d 874, 878 (9th Cir. 1991), affg. and revg. in part on another ground T.C. Memo. 1989-390. In connection with a motion for litigati

A principal reason for the enactment of sec. 7430 was to extend the relief afforded by EAJA to proceedings in this Court so that “one set of rules * * * [would] (continued...) - 42 - Petitioners reliance on Stieha v. Commissioner, supra, is misplaced. In that case, after this Court issued a dispositive decision that caused the Co

Sec. 7491(a)(2)(A)-(C). First, petitioners have not presented credible evidence that the payments by RAF of the Lenzens’ personal expenses were repayments of loans Mr. Lenzen made to RAF. The only evidence petitioners presented regarding the existence of the loans was an illegible copy of a ledger and testimony that the loans we

2412(d)(2)(B) (2000). Neither petitioner has made such a showing. -30- independent lender, see Scriptomatic, Inc. v. United States, 555 F.2d 364 (3d Cir. 1977). The more a transfer appears to result from an arm’s-length transaction, the more likely the transfer will be considered debt. See Bayer Corp. v. Mascotech, Inc. (In re Autosytle Plast

2412 (2000), the language of which closely resembles the relevant language of section 7430(c)(1), at least two District Court opinions have awarded pro se litigants mileage and parking fees. Liberman v. Commr. of Soc. Sec., 232 F. Supp. 2d 18, 20 (E.D.N.Y. 2002) (in addition to items specifically listed in the statutory language, “courts permi

which— (I) has substantially prevailed with respect to the amount in controversy, or (II) has substantially prevailed with respect to the most significánt 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 * * * (B) Exception if United States establishes that its position was substantially justified.— (i) General rule.

Thus, the Commissioner’s position may be incorrect but nevertheless be substantially justified “‘if a reasonable person could think it correct’”. Maggie Mgmt. Co. v. Commissioner, 108 T.C. 430, 443 (1997) (quoting Pierce v. Underwood, supra at 566 n.2). The relevant inquiry is “whether * * * [the Commissioner] knew or should have

2412(d)(1)(B) and (2)(B)(2000)). However, a party shall not be treated as the prevailing party if the Commissioner can establish - 6 - that his position was substantially justified. Sec. 7430(c)(4)(B). Respondent contends that petitioner is not the prevailing party within the meaning of section 7430(c)(4) because, while the stipulation and st

2412(d)(2)(B) (1988). Respondent concedes that petitioner meets this requirement. 4. Not unreasonably protract the proceedings. Sec. 7430(b)(3). Respondent concedes that petitioner meets this requirement. 5. Establish that the amounts of costs and attorney’s fees claimed are reasonable. Sec. 7430(a), (c)(1). Respondent concedes that the amount

2412(d)(1)(A) (1994)). Respondent’s position need not be correct to be substantially justified; it need only have a “reasonable basis in law and fact.” Id. at 566 n.2. Whether - 9 - respondent acted reasonably “ultimately turns upon those available facts which formed the basis for the position taken in the notice of deficiency and during the

2412(d)(1) and (2)(B) (1994). Sec. 7430(c)(4)(A)(ii). Respondent contends, however, that because petitioners did not request an Appeals Office conference petitioners did not exhaust their available administrative remedies and that petitioners protracted the proceedings herein. Respondent also contends that the litigation costs claimed by petit

2412(d)(1)(B) (1986). Respondent concedes that Martin meets this requirement. 5. Show that the taxpayer did not unreasonably protract the proceedings. See sec. 7430(b)(4). Respondent concedes that Martin meets this requirement. 6. Establish that the amount of costs and attorney's fees claimed by the taxpayer is reasonable. See sec. 7430(a), (c

2412(d)(1) and (2)(B) (1994). Sec. 7430(c)(4)(A)(ii). Respondent contends, however, that because petitioners did not request an Appeals Office conference petitioners did not exhaust their available administrative remedies and that petitioners protracted the proceedings herein. Respondent also contends that the litigation costs claimed by petit

2412(d)(1) and (2)(B) (1994). Sec. 7430(c)(4)(A)(ii). Respondent contends, however, that because petitioners did not request an Appeals Office conference, petitioners did not exhaust their available administrative remedies and that petitioners protracted the proceedings herein. Respondent also contends that the litigation costs claimed by peti

2412 (1988)); see also Maggie Management Co. v. Commissioner, 108 T.C. 430, 443 (1997). A position has a reasonable basis in fact if there is relevant evidence that a reasonable mind might accept as adequate to support a conclusion. See Pierce v. Underwood, supra at 564-565. Accordingly, in deciding whether the Commissioner acted reasonably, t

section 2412(d)(2)(B) (1994) at the time the petition was filed. Sec. 7430(c)(4). Respondent has the burden of proving that the position of the United States was substantially justified, and petitioner bears the burden of proof with respect to all other requirements. See sec. 7430(c)(4)(B); Rule 232(e); Maggie Management Co. v. Commissioner, 108 T.

2412(d)(2)(B) (1994). Sec. 7430(c)(4)(A). A taxpayer, however, will not be treated as the prevailing party if the Commissioner establishes that his position was substantially justified. See sec. 7430(c)(4)(B). Respondent contends that petitioners are not a prevailing party because his position was substantially justified.4 Petitioners argue th

section 2412 (1994), and sections 7430 and 6673(a)(2)(B), Messrs. Izen and Jones asked the Court for an award of attorney's fees and costs to their clients. Relying on Fed. R. Civ. P. 11, Tax Court Rule 230, and section 6673(a)(2)(B), Messrs. Izen and Jones also contended that the Court should impose sanctions against respondent in an amount not le

2412 (1988)); see also Ekman v. Commissioner, 184 F.3d 522, 526 (6th Cir. 1999); Maggie Management Co. v. Commissioner, 108 T.C. 430, 443 (1997). A position has a reasonable basis in fact if there is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Pierce v. Underwood, supra at 564-565. The reas

section 2412 (1994), and sections 7430 and 6673(a)(2)(B), Messrs. Izen and Jones asked the Court for an award of attorney's fees and costs to their clients. Relying on Fed. R. Civ. P. 11, Tax Court Rule 230, and section 6673(a)(2)(B), Messrs. Izen and Jones also contended that the Court should impose sanctions against respondent in an amount not le

sec 2412 (1988)); see also Maggie Management Co. v. Commissioner, 108 T.C. - 9 - 430, 443 (1997). A position has a reasonable basis in fact if there is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Pierce v. Underwood, supra at 564-565. The reasonableness of respondent's position and conduct nece

section 2412 (1994), and sections 7430 and 6673(a)(2)(B), Messrs. Izen and Jones asked the Court for an award of attorney's fees and costs to their clients. Relying on Fed. R. Civ. P. 11, Tax Court Rule 230, and section 6673(a)(2)(B), Messrs. Izen and Jones also contended that the Court should impose sanctions against respondent in an amount not le

2412(d)(2)(B) (1994). Sec. 7430(c)(4)(A). A taxpayer, however, will not be treated as the prevailing party if the Commissioner establishes that his position was substantially justified. See sec. 7430(c)(4)(B). Respondent contends that petitioners are not a prevailing party because his position was substantially justified.4 Petitioners argue th

2412 (1988)); see also Maggie Management Co. v. Commissioner, 108 T.C. 430, 443 (1997). A position has a reasonable basis in fact if there is relevant evidence that a reasonable mind might accept as adequate to support a conclusion. See Pierce v. Underwood, supra at 564-565. Accordingly, in deciding whether the Commissioner acted reasonably, t

section 2412(d)(2)(B) (1994). Petitioner petitioned this Court to review respondent's refusal to abate interest in the amount of $5,426.38.4 Petitioner also alleged in the petition that he is not liable for additions to tax (other than that which he already paid in installments), that respondent improperly levied his bank account, and that he may o

section 2412(d)(2)(B) (1994) at the time the petition was filed. Sec. 7430(c)(4). Respondent concedes that petitioner meets the net worth requirements and that petitioner substantially prevailed with respect to the amount in controversy. Therefore, we need only examine the question of whether the Government's litigation position was substantially j

section 2412(d)(2)(B) (1994) at the time the petition was filed. Sec. 7430(c)(4). Respondent concedes that petitioners meet the net worth requirements. Therefore, we need examine only the question of whether petitioners substantially prevailed with respect to the amount in controversy or the most significant issue or issues - 8 - presented in thei

2412 (1988)); Maggie Management Co. v. Commissioner, supra at 443. A - 7 - position has a reasonable basis in fact if there is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Pierce v. Underwood, supra at 564-565. The determination of reasonableness is based on those "available facts which formed

2412(d) (1994), the relevant provisions of the EAJA are almost identical to the language of sec. 7430. See Cozean v. Commissioner, 109 T.C. 227, 232 n.9 (1997). We, therefore, consider the holding in Pierce v. Underwood, supra, to be applicable to the case before us. See Cozean v. Commissioner, supra. - 7 - The determination of reasonableness

section 2412(d)(2)(B) on the date the petition was filed. See sec. 7430(c)(4)(A). 3 Because the proceedings in this case were commenced before the date of enactment of the Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 701, 110 Stat. 1452, 1463, respondent does not bear the burden of proving that the position of the United States was substantiall

See sec. 7430(c)(4)(A)(i), (ii), and (iii). Respondent concedes that petitioners substantially prevailed with respect to the amount in controversy and the most significant issue involved in this case and met the net worth requirements. The parties dispute, however, whether respondent's position in the judicial proceeding was sub

2412 (1994)); see also Republic Plaza Properties Partnership v. Commissioner, T.C. Memo. 1997-239. - 8 - Petitioners contend that, based on the definition of "incurred" set out above, they have incurred the full attorney's fees and costs in this matter. We disagree. Petitioners' liability for fees and costs in this matter is contingent becaus

section 2412(d)(2)(B). See sec. 7430(c)(4)(A)(i) and (ii). A taxpayer will not be treated as a prevailing party, however, if the United States established that its position was substantially justified. See sec. 7430(c)(4)(B). B. Substantial Justification As we stated earlier, respondent concedes that petitioner substantially prevailed and met the n

section 2412(d)(2)(B) (1994). Petitioner petitioned this Court to review respondent’s refusal to abate interest in the amount of $5,426.38. Petitioner also alleged in the petition that he is not liable for additions to tax (other than that which he already paid in installments), that respondent improperly levied his bank account, and that he may of

Sec. 7430(c)(4)(A)(i) and (ii). A taxpayer will not be treated as a prevailing party, however, if the United States establishes that its position was substantially justified. Sec. 7430(c)(4)(B). As we stated earlier, respondent concedes that petitioner substantially prevailed and met the net worth requirements. The parties prima

2412(d)(2)(B) (1988). Respondent concedes that petitioners meet this requirement. 4. Show that they did not unreasonably protract the proceedings. Sec. 7430(b)(4). Respondent concedes that petitioners meet this requirement. 5. Show that the position of the United States in the action was not substantially justified. Sec. 7430(c)(4)(A)(i). Resp

section 2412(d)(2)(B)(as in effect on October 22, 1986) on the date the petition was filed. Sec. 7430(c)(4)(A). A taxpayer will not be treated as a prevailing party if the - 5 - Commissioner establishes that the Commissioner's position was substantially justified. Sec. 7430(c)(4)(B). In addition, to obtain a judgment for reasonable litigation and

section 2412(d)(2)(B) at the time the petition in the case was filed. Sec. 7430(c)(4)(A). However, a party shall not be treated as the prevailing party if the United States establishes that the position of the United States in the proceeding was substantially justified. Sec. 7430(c)(4)(B). Respondent contends that the position of the United States

2412 (1988)); Nalle v. Commissioner, 55 F.3d 189, 191 (5th Cir. 1995), affg. T.C. Memo. 1994-182; Swanson v. Commissioner, 106 T.C. 76, 86 (1996). The determination of reasonableness is based on all of the facts and circumstances surrounding the proceedings. Nalle v. Commissioner, supra at 191. A position has a reasonable basis in fact if ther

section 2412(d)(2)(B) (1991) on the date each petition was filed. Sec. 7430(c)(4)(A). Petitioners must also establish that they have exhausted the administrative remedies available to them within the Internal Revenue Service, that they did not - 6 - unreasonably protract the proceedings, and that the costs claimed are reasonable. Sec. 7430(b) and

2412(d)(1994), the relevant provisions of the EAJA are almost identical to the language of sec. 7430. Powers v. Commissioner, 43 F.3d 172, 183 (5th Cir. 1995), affg. in part and revg. in part T.C. Memo. 1993-125 and 100 T.C. 457 (1993). We, therefore, consider the holding in Pierce v. Underwood, supra, to be applicable to the case before us. 1

2412(d)(2)(B) (1994), as in effect on the date of the enactment of TRA 1986, sec. 1551(h)(3), 100 Stat. 2085, 2753 (sec. 7430(c)(4)(A)(iii)). - 19 - Courts will not award litigation costs under section 7430(a) unless a prevailing party has exhausted the administrative remedies available to such party within the IRS. Sec. 7430(b)(1). Moreover,

2412(d)(2)(B) (1994) at the time the petition in the case was filed. Sec. 7430(c)(4)(A). Additionally, an award of litigation - 3 - costs may be made only where a taxpayer has exhausted available administrative remedies, sec. 7430(b)(1), and no award of costs may be made with respect to any portion of an administrative or judicial proceeding

2412(d)(2)(B) (1988). A taxpayer has the burden of proving that it meets each requirement before we may order an award of costs under section 7430. Rule 230(e); Gantner v. Commissioner, 92 T.C. 192, 197 (1989), affd. 905 F.2d 241 (8th Cir. 1990). In her notice of deficiency, respondent determined a deficiency of $85,835, which was largely attr

2412 (1988)); see also Maggie Management Co. v. Commissioner, 108 T.C. , , (June 11, 1997) (slip op. at 18-19); Sokol v. Commissioner, 92 T.C. 760, 763 n.7 (1989); Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir. 1988). The position of the United States that must be examined against the reasonableness standard is the p

Respondent concedes that petitioner meets this requirement. (e) Establish that the amount of costs and attorney's fees claimed is reasonable. Sec. 7430(a), (c)(1). Recoverable attorney's fees are limited to $75 per hour adjusted for cost of living increases and special factors. Sec. 7430(c)(1)(B)(iii). Respondent contends that p

2412 (1988)); see also Sokol v. Commissioner, 92 T.C. 760, 763 n.7 (1989); Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir. 1988). In considering the reasonableness of respondent's position, we take into account what respondent knew at the time that she took the position based on the information available to her at tha

Conf. Rept. 99-841, at 799, 801 (1986), 1986-3 C.B. (Vol. 4) 1, 799, 801. In the context of the EAJA, the Supreme Court has interpreted the phrase "not substantially justified" to mean "justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565 (1988). This Court has consistently held

2412(d)(2)(B) (1994). Section 7430(b)(1) provides that an award of litigation costs may be made only where a taxpayer has exhausted available administrative remedies. No award of costs may be made with respect to any portion of an administrative or judicial proceeding that the taxpayer has unreasonably protracted, sec. 7430(b)(4), and the cost

2412(d)(2)(B)(1994) on the date the petition was filed. In addition, the claimant must establish that all administrative remedies have been exhausted insofar as litigation costs are concerned; that the claimant has not unreasonably protracted the proceedings; and that the amount of costs claimed is reasonable. Sec. 7430(b)(1), (4). The - 15 -

2412(d)(2)(B) (1988). Respondent concedes that petitioner substantially prevailed in Galedrige I. In addition, we are satisfied, based upon petitioner's submissions to this Court, that petitioner's net worth was less than $7 million when its petition was filed. Rule 231(b)(5). Thus, the only issue remaining for decision is whether the position

2412(d) (1994), the relevant provisions of the EAJA are almost identical to the language of sec. 7430. Powers v. Commissioner, 43 F.3d 172, 183 (5th Cir. 1995), affg. in part and revg. in part T.C. Memo. 1993-125 and 100 T.C. 457 (1993). We, therefore, consider the holding in Pierce v. Underwood, supra, to be applicable to the case before us.

section 2412(d)(2)(B)(1994) on the date the petition was filed. Sec. 7430(c)(4)(A). In addition to being the prevailing party, petitioners must establish that they exhausted the administrative remedies available to them within the Internal Revenue Service (IRS), that they did not unreasonably protract the proceeding, and that the costs claimed are

In considering the reasonableness of respondent's position, we take into account what she knew at the time that she took the position based on the information available to her at that time. See Rutana v. Commissioner, 88 T.C. 1329, 1334 (1987). Petitioners claim that, even without their cooperation, Agent Red had the obligation t

2412(d)(2)(B) (1994). In addition, petitioners must prove - 8 - that they exhausted their administrative remedies within the meaning of section 7430(b)(1);3 that they did not unreasonably protract the proceedings within the meaning of section 7430(b)(4); and that their claimed costs are reasonable, sec. 7430(c)(1) and (2). These requirements

2412(d)(2)(B) (1994). In addition, petitioners must prove - 8 - that they exhausted their administrative remedies within the meaning of section 7430(b)(1);3 that they did not unreasonably protract the proceedings within the meaning of section 7430(b)(4); and that their claimed costs are reasonable, sec. 7430(c)(1) and (2). These requirements

In considering the reasonableness of respondent's position, we take into account what she knew at the time that she took the position based on the information available to her at that time. See Rutana v. Commissioner, 88 T.C. 1329, 1334 (1987). Petitioners claim that, even without their cooperation, Agent Red had the obligation t

2412 (1988)); Rickel v. Commissioner, 900 F.2d 655, 665 (3d Cir. 1990), affg. in part and revg. in part on other grounds 92 T.C. 510 (1989); Huffman v. Commissioner, supra at 1147. The fact that the Commissioner eventually loses or concedes the case does not in itself establish that a position is unreasonable. - 15 - Wilfong v. United States,

2412(d)(2)(B) - 4 - (1994) (as in effect on the date of the enactment of the Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551(h)(3), 100 Stat. 2085, 2753) (sec. 7430(c)(4)(A)(iii)). Courts will not award litigation costs under section 7430(a) unless a prevailing party has exhausted the administrative remedies available to such party with the

section 2412(d)(2)(B)(1988). Sec. 7430(c)(4)(A); Comer Family Equity Pure Trust v. Commissioner, 958 F.2d 136, 139 (6th Cir. 1992), affg. per curiam T.C. Memo. 1990-316; Powers v. - 4 - Commissioner, supra. The term "position of the United States" in this context, see supra note 2, means the position taken by the United States in a judicial procee

2412 (1994), and section 7430. Swanson v. Commissioner, 106 T.C. at 100. Section 7430 has its roots in the EAJA, and, during 1986, Congress amended that section to conform it more closely to the EAJA, adopting the EAJA's $75 per hour limitation on attorney's fees and the EAJA's existing COLA language. Bayer v. Commissioner, 98 T.C. 19, 24 (199

2412 (1988), by changing "unreasonable" to "not substantially justified". Tax Reform Act of 1986, Pub. L. 99-514, sec. 1551, - 11 - 100 Stat. 2752; see H. Conf. Rept. 99-841, at II-801 (1986), 1986-3 C.B. (Vol. 4) 1, 801. The purpose of the amendment was to conform section 7430 more closely to EAJA. H. Rept. 99-841, supra at II-801, 1986-3 C.

section 2412 (1994), allows courts to award attorney's fees and other expenses to a prevailing party in actions against the Government. At times we will draw on the more extensive case law under the EAJA in order to interpret an analogous provision in section 7430. Kenagy v. Unites States, 942 F.2d 459 (8th Cir. 1991) (where wording is consistent,