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PFI concedes that Pacific Harbor, and not Partnership or PFI,
paid all of the litigation costs at issue. However, it asserts
that those litigation costs were "incurred for PFI in its capacity
as tax [matters] partner in bringing its Petition" (emphasis
added) in this case and that therefore either PFI or Partnership
satisfies section 7430(a)(2). We disagree.
In addressing the meaning of the word "incurred" in the
context of section 7430, the Court has observed that the common
meaning of the word incur is "to become liable or subject to:
bring down upon oneself." Frisch v. Commissioner, 87 T.C. 838,
846 (1986). Fees and expenses are incurred when there is a legal
obligation to pay them. See Marre v. United States, 38 F.3d 823,
828-829 (5th Cir. 1994); see also United States v. 122.00 Acres of
Land, 856 F.2d 56 (8th Cir. 1988) (applying sec. 304(a)(2) of the
Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, 42 U.S.C. sec. 4654(a), Pub. L. 91-646, 84
Stat. 1984, 1906 (1994); attorney's fees were not actually "in-
curred" because the party claiming them had no legal obligation to
pay them); SEC v. Comserv Corp., 908 F.2d 1407, 1414-1415 (8th
Cir. 1990) (construing to a similar effect the Equal Access to
Justice Act, codified at 5 U.S.C. sec. 504 and 28 U.S.C. sec. 2412
(1994)).
On the record before us, we find that PFI has failed to
establish that either Partnership or PFI was legally obligated to
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