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withheld), and that petitioners can deduct the related State
income tax withholding ($1,477) and State disability insurance
($273) on their Schedule A, Itemized Deductions. Respondent also
agrees that petitioners can deduct $20,000 of the $62,545
itemized deductions in dispute, and that petitioners can deduct
$5,172 of the $7,334 Schedule C expenses in dispute.
In connection with petitioners' motion for administrative
and litigation costs, petitioners claim that they incurred
$34,003 in administrative and litigation costs from July 5, 1995,
to August 31, 1996, stemming primarily from approximately
110 hours of legal services at a rate of approximately $300 per
hour. Petitioners request an award of $20,000 of these costs,
plus an award of 60 percent of the unstated attorney's fees that
they incurred in the preparation and prosecution of the motion at
hand.
Discussion
Section 7430(a) provides that the prevailing party may be
awarded: (1) Reasonable administrative costs incurred in
connection with an administrative proceeding within the Internal
Revenue Service and (2) reasonable litigation costs incurred in
connection with a court proceeding. The Congress enacted
section 7430 as part of the Tax Equity and Fiscal Responsibility
Act of 1982, Pub. L. 97-248, sec. 292(a), 96 Stat. 324, 572, and,
as relevant hereto, the Congress amended section 7430 as part of
the Technical and Miscellaneous Revenue Act of 1988, Pub. L.
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