John F. and Tracy L. Barford, et al. - Page 10

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               Given these facts, we believe respondent was substantially             
          justified when respondent imputed interest income under section             
          482 for the two loan transactions.  Because petitioners have not            
          proved that respondent's position on that issue was not                     
          substantially justified, and because petitioners have conceded              
          that the litigation costs are not severable or allocable between            
          that issue and the other issue raised in their petitions (the               
          valuation of the RAM Drilling Stock), petitioners are not                   
          entitled to awards of fees.  Therefore, we need not reach the               
          other issues under section 7430.                                            
               Accordingly, petitioners' motions for award of reasonable              
          litigation costs are denied.                                                
                                                  Appropriate orders and              
                                             decisions will be entered.               

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