National Industrial Investors, Inc. - Page 7

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            in part and revg. in part T.C. Memo. 1991-189; Estate of Perry,                            
            931 F.2d at 1046; Powers v. Commissioner, supra at 471.  Where                             
            the facts on which the Commissioner relies are not "unusually                              
            scanty or unworthy of belief," the failure of the facts to                                 
            convince the Court of the ultimate persuasiveness of the                                   
            respondent's position generally is not reason to hold that her                             
            position is unreasonable or without substantial justification.                             
            VanderPol v. Commissioner, 91 T.C. 367, 370 (1988).                                        
            Issue 1.  Whether Petitioner Qualifies as a Prevailing Party                               
                  A.  Recovery of Administrative Costs                                                 
                  Section 7430, for present purposes, limits recoverable                               
            administrative costs to those incurred on or after the date of                             
            the notice of deficiency and up to the time the petition was                               
            filed.  Sec. 7430(c)(2).  See Huffman v. Commissioner, supra at                            
            1145.  Petitioner claims $2,312.55 as recoverable administrative                           
            costs, based on accounting fees of $2,724 incurred between                                 
            December 7, 1991 and August 15, 1992, and legal fees of $1,375                             
            incurred from June 24, 1992 to March 9, 1993.  However, the                                
            notice of deficiency was not issued until September 16, 1993.                              
            Petitioner thus seeks administrative costs for accounting and                              
            legal fees that it admittedly incurred prior to the date of the                            
            statutory notice of deficiency.  Consequently, we hold that                                
            petitioner cannot recover any of these costs.                                              
                  B.  Recovery of Litigation Costs                                                     




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