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Commissioner, 87 T.C. 838, 846 (1986); Thompson v. Commissioner,
T.C. Memo. 1996-468. FRC paid all the litigation costs in issue.
We conclude that a first-tier partner of FRC may receive an award
for such costs only to the extent they were allocated (e.g.,
under the partnership agreement) to that partner. The costs paid
by FRC were allocated to petitioner, Hon Family Ventures, Ltd.,
and Hon Property Investments, Inc., as follows:
1995 1996 1997
Petitioner 25.00% 19.88% 1%
Hon Family Ventures, Ltd. 23.08 25.36 3
Hon Property Investments, Inc. .52 .35 --
Therefore, petitioner, Hon Family Ventures, Ltd., and Hon
Property Investments, Inc., are eligible to receive an award for
costs to the extent of their allocable share in FRC during the
year in which the costs were paid.
B. Reasonable Costs
1. Services of an Attorney
Section 7430(c)(1) defines reasonable litigation costs as
reasonable fees paid or incurred for the services of attorneys in
connection with the court proceeding. Section 7430(c)(3)
provides that fees for the services of an individual (whether or
not an attorney) who is authorized to practice before the Court
or IRS shall be treated as fees for the services of an attorney
for purposes of section 7430(c)(1). See Cozean v. Commissioner,
109 T.C. 227, 234 (1997) (allowing litigation costs attributable
to services performed by accountants). We have also allowed
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