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it was reasonable for them to incur costs without incurring
additional costs to calculate how much of any item primarily
benefited Sandra rather than Michael. Also, everything that
affected the amount of the deficiency might have affected the
amount of the civil fraud penalty. See sec. 6663(a).
Accordingly, we reject respondent’s contention that we should
reject petitioners’ costs that “pertain to the bank deposits
method”. Accordingly, we conclude that one-eighth of the
administrative costs and the litigation costs (except as to
litigation costs incurred in connection with the instant motion
for costs) is properly allowable to Sandra in connection with the
fraud issue.
Respondent contends that none of the costs incurred before
April 3, 1998, are awardable, relying on the last sentence of
section 7430(c)(2). See supra note 4. Sandra does not appear to
dispute respondent’s factual predicates or statutory
interpretation. Accordingly, none of the costs incurred before
April 3, 1998, are to be taken into account in determining the
total to which the one-eighth allocation is to be applied.
Respondent also contends that Sandra is not entitled to
litigation costs in connection with petitioners’ motion to
restrain assessment and collection. It appears that, in
violation of section 6213(a), respondent assessed the determined
deficiencies and penalties after petitioners filed their
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