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upon the following expenses: $60.00 for the filing fee and $3,860
for attorney's fees. An objection to petitioner's motion by
respondent was filed.
Neither party requested a hearing on petitioners' motion.
Rule 232(a). Accordingly, we rule on petitioners' motion on the
basis of the parties' submissions and the record in this case.
The underlying issues raised in the petition were settled by a
stipulation of settlement. At the time the petition was filed,
petitioners resided in San Antonio, Texas.
By notice of deficiency, respondent determined deficiencies
in petitioners' Federal income taxes of $7,182, $3,290, and
$3,378 for the taxable years 1995, 1996, and 1997, respectively.
Under section 7430, a taxpayer may be awarded a judgment for
reasonable litigation costs if the taxpayer establishes certain
criteria and if respondent’s position was not substantially
justified. Respondent concedes that petitioner substantially
prevailed for purposes of section 7430(c)(4)(A)(i). However,
respondent maintains that his position was substantially
justified, that petitioners did not exhaust their administrative
remedies, that petitioners unreasonably protracted the Court
proceeding, and that the costs claimed are not reasonable.
Because of our disposition of this issue, we need only address
whether respondent's position was substantially justified.
In deciding the merits of a motion for litigation costs, the
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