- 3 - a home. In 1997, David transferred the home to Mr. Tandiono, who held a mortgage on the property. At the time of the filing of the petition in 1999, David resided in this home, paying repair and miscellaneous expenses but no rent. Respondent reconstructed petitioners’ incomes using the cash expenditures method and determined unreported income of over $9 million relating to the years in issue. In February 2002, this Court held that the amounts in dispute were nontaxable gifts. On March 22, 2002, petitioners filed their motion for award of litigation costs (motion). Petitioners’ motion contained a statement that petitioners each had a net worth of less than $2 million when they filed their petitions. Each petitioner also submitted a one-page affidavit attempting to verify his or her net worth. On May 1, 2002, respondent filed his response and objection to the motion for litigation costs (response and objection), specifically contending that the affidavits were insufficient to establish net worth. On June 20, 2002, petitioners then filed a supplement to motion for award of litigation costs (supplement) in reply to respondent’s response and objection but did not address the issue of net worth. Discussion The prevailing party in a Tax Court proceeding may recover litigation costs. Sec. 7430(a); Rule 231. Except as provided in section 7430(c)(4)(B), petitioners bear the burden of provingPage: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011