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).
Discussion
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
requirement.
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