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administrative costs under section 74302 and Rule 231. Prior to
trial, the parties reached a basis for settlement. When the
cases were called from the calendar on March 13, 1995, in New
Orleans, Louisiana, the parties appeared and filed decision
documents reflecting their settlement. Accordingly, this Court
entered decisions on March 16, 1995. These decisions were
subsequently vacated and set aside on May 30, 1995, and
petitioners were permitted to file their motion for award of
reasonable litigation and administrative costs. On August 14,
1995, respondent filed a notice and supporting memorandum of law
objecting to petitioners' motion for award of reasonable
litigation and administrative costs.
The primary issue for decision is whether petitioners have
established that respondent's position in the underlying actions
was not substantially justified. If we find that respondent's
position was not substantially justified, we then must determine
whether the litigation and administrative costs claimed by
petitioners are reasonable. As is discussed herein, we hold that
respondent's position in the underlying actions was substantially
justified.
Background
Upon review of the pleadings, petitioners' motion for
reasonable litigation and administrative costs, and respondent's
2Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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