James H. Swanson and Josephine A. Swanson - Page 3

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                         OPINION OF THE SPECIAL TRIAL JUDGE                           
               DEAN, Special Trial Judge:  This matter is before the Court            
          pursuant to petitioners' motion for award of reasonable                     
          litigation costs under section 7430 and Rule 231.                           
               References to petitioner are to James H. Swanson.                      
               The matter before us involves petitioners' combined use of a           
          domestic international sales corporation, a foreign sales                   
          corporation, and two separate individual retirement accounts as a           
          means of deferring the recognition of income.  Respondent                   
          zealously strove to characterize this arrangement, as well as an            
          unrelated sale by petitioners of their Illinois residence, as tax           
          avoidance schemes.  A protracted period of entrenchment ensued,             
          during which the parties firmly established their respective                
          positions, neither side wavering from its conviction that it was            
          in the right.  Ultimately, however, these issues were resolved by           
          respondent's notice of no objection to petitioners' motion for              
          partial summary judgment as well as the entry of an agreed                  
          decision document, which was later set aside and filed as a                 
          stipulation of settlement.  As a consequence, petitioners now               
          seek redress for what they claim were unreasonable positions                
          taken by respondent.                                                        











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