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supra. The Court upheld petitioners’ discounts for the valuation
of the FLP interests.
Respondent’s expert holds a Ph.D. and M.B.A., has extensive
qualifications and expertise, and used sound valuation methods in
his report. Cf. Estate of Cervin v. Commissioner, 111 F.3d 1252
(5th Cir. 1997) (holding that respondent was not substantially
justified for relying upon the discredited unity-of-ownership
valuation theory), revg. T.C. Memo. 1994-550. Despite the
expert’s performance at trial, respondent’s adoption of the
expert’s report was reasonable. Accordingly, respondent was
substantially justified, and petitioner is not entitled to
litigation costs related to the valuation issue.
II. Reasonable Costs
Petitioners may recover only litigation costs related to the
FLP issue. See sec. 7430(a)(2), (c)(1). Section
7430(c)(1)(B)(iii) imposes a statutory rate for attorney’s fees
(i.e., $140 per hour relating to calendar year 2001). See Rev.
Proc. 2001-13, 2001-1 C.B. 337, 341. In their supplement,
petitioners seek litigation costs in the amount of $68,593 (i.e.,
489.95 hours), of which petitioners allocated $50,540 (i.e., 361
hours2) to the FLP issue. Respondent contends $39,900 (i.e., 285
2 Petitioners, in their supplement, state that Chamberlain
worked 48 hours on the valuation issue, but Exhibit C of the
supplement indicates that Chamberlain worked 49 hours on that
issue.
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Last modified: May 25, 2011