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3. Amounts of Reasonable Administrative and Litigation
Costs
We next decide whether the amounts of petitioner's
administrative and litigation costs were reasonable. Reasonable
costs include (a) administrative fees or similar charges imposed
by the IRS, (b) reasonable expenses of expert witnesses, (c)
reasonable costs of studies, analyses, engineering reports,
tests, or projects that are necessary to prepare the taxpayer's
case, and (d) reasonable fees paid or incurred for the services
of attorneys. Sec. 7430(c)(1) and (2). Petitioner bears the
burden of proving that these costs are reasonable. Rule 232(e).
a. Attorney's Fees
Petitioner seeks attorney's fees based on 136.6 hours billed
by its counsel.
Respondent argues that petitioner's counsel's invoices do
not show the number of hours he spent for each activity he
performed for petitioner, and that they contain billings for some
services that do not relate to petitioner. Petitioner submitted
a revised affidavit from Shannahan in an attempt to show the
number of hours he spent working on this case. We agree with
respondent in part. Shannahan billed 13.1 hours to prepare the
Tax Court petition for petitioner's shareholder, to prepare S
corporation elections, to write letters to the California
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