Pizza Industries, Inc., Domino's Pizza - Page 2




               After concessions by the parties,2 the sole issue for                  
          decision is whether respondent has established that respondent's            
          position was substantially justified in the administrative and              
          court proceedings.  We hold that respondent has not.                        
               Neither party requested an evidentiary hearing, and the                
          Court concludes that such a hearing is not necessary for the                
          proper disposition of petitioner's motion.  See Rule 232(a)(2).             
          We therefore decide the matter before us based on the record that           
          has been developed to date.                                                 
          Background                                                                  
               Petitioner is a California corporation owned 51 percent by             
          Pizza Park Corporation, an S corporation, (Pizza Park) and 49               
          percent by Michael Brown (Mr. Brown).  Pizza Park is wholly owned           


          issue.  However, all references to sec. 7430 are to such section            
          in effect at the time that the petition was filed.  All Rule                
          references are to the Tax Court Rules of Practice and Procedure.            
               2  Respondent concedes: (1) Petitioner exhausted its                   
          administrative remedies, see sec. 7430(b)(1); (2) petitioner did            
          not unreasonably protract the proceedings, see sec. 7430(b)(3);             
          (3) petitioner substantially prevailed, see sec.                            
          7430(c)(4)(A)(i); and (4) petitioner satisfied the applicable net           
          worth requirement, see sec. 7430(c)(4)(A)(ii).                              
               Initially, there was an issue as to the reasonableness of              
          the claimed costs.  However, petitioner has substantiated the               
          expenses contested by respondent and has conceded that attorney's           
          fees are recoverable only to the extent of $110 per hour (plus              
          any allowable increases for the cost of living).  See sec.                  
          7430(c)(1)(B)(iii), (c)(2)(B).  Because of petitioner's                     
          concession regarding the rate of recovery for attorney's fees,              
          the claimed costs have been reduced from $12,005 to $9,477 (13.3            
          hours for 1997 at the rate of $110 per hour and 63.8 hours for              
          1998 at the rate of $120 per hour (cost of living adjusted) plus            
          $358 in expenses).  Respondent does not contest the                         
          reasonableness of the $9,477 amount.                                        




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