-2-
and Rule 231, filed June 24, 1997, and petitioner's amended
motion, filed September 2, 1997.2 Petitioner's motion is for
only the reasonable litigation costs it expended on the issue of
whether it was liable for the addition to tax pursuant to section
6661 (the section 6661 issue) in Galedrige Construction, Inc. v.
Commissioner, T.C. Memo. 1997-240 (Galedrige I).
The issues for decision are: (1) Whether respondent's
determination of the section 6661 addition to tax for substantial
understatement of tax was substantially justified within the
meaning of section 7430(c)(4) and the regulations thereunder. We
hold it was not. (2) Whether the amount of litigation costs
claimed by petitioner is reasonable within the meaning of section
7430(c)(1). We hold it is.
1(...continued)
recently by the Taxpayer Bill of Rights 2, Pub. L. 104-168, sec.
701, 110 Stat. 1452, 1463-1464 (1996), effective with respect to
proceedings commenced after July 30, 1996. The amendments to the
section shift to the Commissioner the burden of proving that the
position of the United States was substantially justified, sec.
7430(c)(4)(B), and changed the hourly rate for attorney's fees to
$110, sec. 7430(c)(1)(B)(iii).
A judicial proceeding is commenced in this Court with the
filing of a petition. Rule 20(a); Maggie Management Co. v.
Commissioner, 108 T.C. 430 (1997). Petitioners filed their
petition on Nov. 21, 1994; thus the 1996 amendments do not apply
here.
2 All section references are to the Internal Revenue Code
in effect for the years in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated. All dollar amounts are rounded to the
nearest dollar, unless otherwise indicated.
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