- 12 -
specifically alleged error or countered, on brief, respondent’s
position with respect to respondent’s treatment of the $400
amounts. Accordingly, respondent’s decision not to reverse the
“$400 portion” of the reimbursement income is not in controversy,
and there is no need to consider that aspect of the
determination.
In addition to contesting the substance of respondent’s
determination, petitioner also contends that the amounts
disallowed by respondent are unreasonable and inaccurate. The
problem is generated by the fact that petitioner did not
specifically account for litigation costs in reporting its
income. Petitioner used a form of netting to arrive at the
amount of the claimed deduction. Petitioner’s approach is to
treat receipts and expenses as part of a “revolving pool into
which unsegregated receipts” were deposited and then used to pay
expenses. Respondent determined that $129,815 of petitioner’s
$358,092 in claimed deductions was not allowable by concluding,
in part, that reimbursements during the first 6 months of the
next fiscal year (ended May 1994) represented litigation costs
advanced by petitioner during the 1993 fiscal year. Petitioner
argues that respondent ignored the revolving pool concept and,
instead, calculated the disallowed portion of the deduction using
an analysis of individual cases pending in petitioner’s office.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011