- 5 -
and ABC properly elected out of MACRS under section 168(f)(1).
Furthermore, in ABC Rentals II, since the parties stipulated
as to the estimate of income expected over the life of the rental
property, and this estimate was borne out by petitioners’
experience, and since they stipulated that 1991-92 data did not
vary materially from the years in question, we held that in this
situation petitioners did accurately forecast the income expected
over the life of the rental property. In addition, since the
salvage value was inconsequential and since the parties
stipulated that 1991 and 1992 data did not vary materially from
1987 and 1988 data, we held that under those circumstances
petitioners did not have to make an adjustment to the rental
units’ costs for salvage value.
Discussion
I. Section 7430 Overview
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
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