Eugene P. Kremer - Page 2




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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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