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meets the net worth test. Respondent does not dispute
petitioner’s allegations and agrees that petitioner is entitled
to costs and fees. The dispute between the parties concerns the
reasonableness of petitioner’s claim for costs and fees.
Background
During 1993, respondent examined the Federal tax returns of
disability retirees (including petitioner) of the City of
Oakland, California, and, as of 1995, petitioner’s counsel
represented more than 300 similarly situated taxpayers. During
1995, a test or lead case approach was agreed to, and a group of
taxpayers agreed with respondent to be bound by the outcome of
that case. The policy was not uniform, however, and petitioner
and other taxpayers were not afforded agreements to be bound to a
test case. During January 1996, a case with the same issue,
Picard v. Commissioner, T.C. Memo. 1997-320, was submitted to the
Court, resulting in a 1997 decision adverse to the taxpayer.
On December 10, 1998, respondent determined a deficiency for
petitioner’s 1996 tax year attributable to the disability income.
On January 26, 1999, the Court of Appeals for the Ninth Circuit
reversed this Court’s holding in Picard v. Commissioner, 165 F.3d
744 (9th Cir. 1999), revg. T.C. Memo. 1997-320. On February 5,
1999, before incurring the expense of filing a petition in
response to the December 10, 1998, deficiency notice, petitioner
advised that he would agree to an extension of the period of
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