Beaver Bolt, Inc. - Page 4

          agreed that the fair market value of Grecco's stock in petitioner           
          was $189,300.  At trial, respondent contended that the value of             
          the covenant was $52,669.                                                   
               Respondent did not contend that petitioner paid the $513,400           
          to Grecco for anything other than the covenant not to compete and           
          Grecco's stock in petitioner.  Petitioner argued, and we held,              
          that the covenant not to compete was worth $324,100, the                    
          difference between the total amount petitioner paid Grecco                  
          ($513,400) and the agreed value of Grecco's stock redeemed by               
          petitioner ($189,300).                                                      
          A.   Motion for Litigation Costs:  Introduction                             
               Generally, a taxpayer who has substantially prevailed in a             
          Tax Court proceeding may be awarded reasonable litigation costs.            
          Sec. 7430(a)(2).  To be entitled to an award, the taxpayer must:            
               (a)  Exhaust administrative remedies.  Sec. 7430(b)(1).                
          Respondent concedes that petitioner meets this requirement.                 
               (b) Substantially prevail with respect to the amount in                
          controversy.  Sec. 7430(c)(4)(A)(ii)(I).  Respondent concedes               
          that petitioner meets this requirement.                                     
               (c) Show that the position of the United States in the                 
          action was not substantially justified.  Sec. 7430(c)(4)(A)(i).             
          Respondent contends that petitioner does not meet this                      

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