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Discussion
A. General Background
Respondent determined a deficiency in petitioners’ 1993
Federal income tax of $8,909. Respondent conceded all
adjustments determined in the notice of deficiency, and the
remaining issue for trial concerned whether petitioners were
entitled to an overpayment. To answer that question we had to
decide whether the interest paid by petitioners was deductible as
business interest. If deductible as business interest,
petitioners would have been entitled to certain deductions that
they had not claimed on their returns, and an overpayment. The
matter was decided in petitioners’ favor. See Lim v.
Commissioner, T.C. Memo. 1998-432, filed December 10, 1998.
Section 7430 provides for the award of reasonable
administrative and litigation costs to a taxpayer in an
administrative or court proceeding brought against the United
States involving the determination of any tax, interest, or
penalty pursuant to the Internal Revenue Code. An award of
administrative or litigation costs may be made where the
taxpayer: (1) Is the prevailing party, (2) exhausted available
administrative remedies,3 and (3) did not unreasonably protract
3 This requirement does not apply to an award for reasonable
administrative costs. See sec. 7430(b)(1).
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Last modified: May 25, 2011