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report business income of $1,160, he also had failed to claim
certain business expenses. They requested that the Appeals
officer allow additional time for them to gather substantiation
for the unclaimed expenses. On September 21, 2001, petitioners
faxed to the Appeals officer a copy of a Schedule C for Mr.
Prouty that reported the previously unreported nonemployee
compensation of $1,160 and also unclaimed expenses of $720.
Respondent having conceded petitioner's TV executive
expenses of $7,904 as of March 20, 2001, petitioners conceded the
other adjustments in the notice of deficiency, and respondent
additionally agreed to the Schedule C expenses for Mr. Prouty of
$720. A Stipulation of Settlement was filed by Order of the
Court dated February 13, 2002.
OPINION
Requirements Under Section 74302
Under section 7430(a), a judgment for costs incurred in an
administrative proceeding in connection with the determination of
any tax may be awarded only if a taxpayer: (1) Is the
"prevailing party"; and (2) did not unreasonably protract the
administrative proceeding. See sec. 7430(a) and (b)(3).
A taxpayer must satisfy each of the respective requirements
in order to be entitled to an award of administrative costs under
2We apply sec. 7430 as amended by Congress in the IRS
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3101,
112 Stat. 727-730.
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