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trial, to fix and award a reasonable sum. [Allen v.
Commissioner, 246 F.3d 672 (9th Cir. 2000).]
The holding of the Court of Appeals for the Ninth Circuit
limits any recovery of costs by petitioners to those incurred
during the period that began 3 days before trial. Because this
Court decided that respondent’s position was substantially
justified, we did not have to consider the other prerequisites to
recovery of litigation costs under section 7430.5 The only
requirement of section 7430 that remains in controversy6 is
whether petitioners exhausted their administrative remedies as
required by section 7430(b)(1). See also sec. 301.7430-1(b)(2),
Proced. & Admin. Regs.
FINDINGS OF FACT7
Petitioners’ residence was damaged by a neighbor’s removal
of soil supporting the foundation under petitioners’ residence.
Petitioners’ insurance claim ended in disagreement, and suit was
filed against the insurance company. In their pleading,
petitioners sought recovery on several grounds, including the
5 A taxpayer’s failure to meet any of the requirements of
sec. 7430 is fatal to their claim for litigation costs.
6 There is no remaining controversy with respect to the
amount of fees petitioners are entitled to if we decide that they
did exhaust their administrative remedies.
7 The parties’ stipulation of facts is incorporated by this
reference. To the extent relevant, our findings in Allen v.
Commissioner, T.C. Memo. 1998-406, and Allen v. Commissioner,
T.C. Memo. 1999-118, are incorporated herein.
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Last modified: May 25, 2011