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Federal income tax returns for taxable years 1989 and 1990,
petitioners claimed their allocable portions of the amortized
noncompetition agreements with respect to both Brigitte and
Michael. Although respondent was originally satisfied with the
valuation of the noncompetition agreement with respect to
Michael, respondent was not so satisfied with respect to
Brigitte. Maintaining that the noncompetition agreement with
respect to Brigitte was inaccurately valued, respondent mailed a
notice of deficiency with respect to taxable years 1989 and 1990
to each petitioner on September 24, 1993. In each deficiency
notice, respondent disallowed the portion of the amortization of
the noncompetition agreement allocated amongst petitioners with
respect to Brigitte.
In January 1995, less than 2 months prior to trial, Michael
informed respondent that his testimony at trial would differ from
information he had earlier provided to respondent's agent. In
light of this information previously unknown to respondent,
respondent reassessed her position and ultimately conceded each
case. This full concession was reflected in decisions filed with
this Court when the cases were called for trial, but their
decisions were subsequently vacated in order to permit
petitioners to file their motion for reasonable costs.
Discussion
Under section 7430(a), a "prevailing party", in specified
civil tax proceedings, may be awarded a judgment for reasonable
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