Ingo H. Jensen - Page 7

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               The final issue involved petitioner’s treatment of the                 
          canceled nonrecourse debt.  On September 8, 1999, Mr. Tkacik                
          informed Mr. Battagline that respondent was now treating the                
          matter as a taxable exchange under section 1001 and that                    
          respondent therefore needed documentation regarding petitioner’s            
          basis in the property.  On November 29, 1999, Mr. Battagline                
          contacted Mr. Tkacik, stating that the required documentation               
          would be furnished.  Mr. Tkacik received the documentation on               
          January 6, 2000.  After an initial disagreement over the tax                
          treatment of the exchange and on the basis of additional                    
          information received by respondent on February 18, 2000,                    
          respondent conceded the case on February 24, 2000.  On April 14,            
          2000, the parties filed a stipulation of settlement.  On the same           
          date, petitioner’s motion for litigation costs of $15,778.29 was            
               Section 7430 provides that, in any court proceeding brought            
          by or against the United States, the “prevailing party” may be              
          awarded reasonable litigation costs if the “prevailing party”               
          establishes that he exhausted the administrative remedies                   
          available within the Internal Revenue Service and did not                   
          unreasonably protract the proceedings.  See sec. 7430(b)(1), (3).           
          For petitioner to qualify as a “prevailing party” for purposes of           
          section 7430, it must be established that:  (1) The position of             

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