T.C. Memo. 2002-302
UNITED STATES TAX COURT
PHILLIP LEE ALLEN AND CAROLYN F. ALLEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 243-97. Filed December 11, 2002.
Ps were successful in this Court in showing that a
$130,000 payment received in settlement of an insurance
claim was not for punitive damages and that any gain
realized would not be recognized under sec. 1033,
I.R.C. Ps seek to recover litigation costs under sec.
7430, I.R.C. The parties disagree about one of the
prerequisites to recovery--whether Ps exhausted their
administrative remedies before the Internal Revenue
Service. Sec. 7430(b)(1), I.R.C.; sec. 301.7430-
1(b)(2), Proced. & Admin. Regs.
Following the examination, Ps’, in the Appeals
conference, argued that repair costs exceeded the total
insurance recovery so that no portion was attributable
to punitive damages. R contends that Ps, in order to
have exhausted their administrative remedies, should
have submitted additional information to the Appeals
officer. Some of the information was in existence and
some was not available to Ps at the time of the Appeals
conference.
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