John J. Petito - Page 8




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          Agent Messecca testified that he prepared the notice of                     
          deficiency as directed by Special Agent Hill using the schedule             
          prepared by Mr. Mulcahy and the tax returns filed by petitioner             
          and Petito Corp. for 1992.  On the record presented, the Court              
          denied petitioner’s motion for reconsideration on the ground                
          that, although the notice of deficiency may have been incorrect,            
          it was not invalid for the purpose of invoking the Court’s                  
          jurisdiction.                                                               
               On September 28, 2001, the District Court granted the                  
          Government’s motion to dismiss the indictment filed against                 
          petitioner.                                                                 
               On November 16, 2001, respondent filed with the Court a                
          status report stating that respondent would concede the instant             
          case.  On February 21, 2002, the parties filed a stipulation of             
          settled issues stating that petitioner is not liable for any                
          deficiency, addition to tax, or penalty, nor is petitioner                  
          entitled to an overpayment for the taxable year 1992.                       
                                     Discussion                                       
               We apply section 7430 as amended by Congress in the Internal           
          Revenue Service Restructuring and Reform Act of 1998, Pub. L.               
          105-206, sec. 3101, 112 Stat. 685, 727.                                     
               Under section 7430(a), a judgment for litigation costs                 
          incurred in connection with a court proceeding may be awarded               
          only if a taxpayer:  (1) Is the prevailing party; (2) has                   






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