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4. Held, further, the amount sought by P for
litigation costs is not reasonable and is adjusted
accordingly.
Michael S. Harms and McGee Grigsby, for petitioner.
William H. Quealy, Jr. and Paul B. Burns, for respondent.
OPINION
FOLEY, Judge: This matter is before the Court on
petitioner's motion for an award of litigation costs pursuant to
section 7430 and Rule 231. Unless otherwise indicated, all
section references are to the Internal Revenue Code in effect for
the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
Background
In early 1987, Laguna Niguel Properties, a Delaware
corporation, purchased the Whiting Ranch, a parcel of
approximately 2,743 acres of undeveloped land. Laguna
subsequently exchanged the Whiting Ranch for an interest in
Foothill Ranch Company Partnership (FRC), a California limited
partnership.
In March of 1988, FRC and Orange County, California,
executed an agreement that provided: (1) FRC would be allowed to
build housing units on the Whiting Ranch; (2) FRC would construct
a library, a school, roads, water and sewer lines, and other
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