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prenuptial agreement between himself and his wife that affected
the division of business income and expenses. Second, he
disclosed the source of unreported income with respect to his
1992 tax year. Third, he explained how his business had large
profits in some years and large losses in others.
On June 27, 1997, Melick offered to concede all adjustments
for the 1992 tax year. Melick also requested additional
information regarding the 1994 tax year, and she indicated that
respondent would concede the adjustments for the 1993 and 1994
tax years upon the receipt of such information. On July 2, 1997,
petitioner provided the additional information sought by
respondent. Upon receipt of the information, respondent conceded
the adjustments for the 1993 and 1994 tax years.
Discussion
A taxpayer who has substantially prevailed in a Tax Court
proceeding may be awarded reasonable litigation costs incurred in
such proceedings. See sec. 7430(a)(2). Under section 7430, a
judgment for litigation costs incurred in connection with a court
proceeding may be awarded only if a taxpayer: (1) Has exhausted
his administrative remedies within the IRS; (2) has substantially
prevailed with respect to the amount in controversy or the most
significant issue or set of issues presented; (3) has satisfied
the applicable net worth requirement; and (4) did not
unreasonably protract the court proceeding.
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