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that petitioner may claim a deduction for attorney’s fees in the
amount of $1,377.10
6. Audit Examination
Section 7605(b) provides:
No taxpayer shall be subjected to unnecessary examination or
investigations, and only one inspection of a taxpayer’s
books of account shall be made for each taxable year unless
the taxpayer requests otherwise or unless the Secretary,
after investigation, notifies the taxpayer in writing that
an additional inspection is necessary.
This Court stated in Digby v. Commissioner, 103 T.C. 441,
445 (1994):
The Supreme Court, after a review of the legislative
history, interpreted the purpose of section 7605(b) as being
congressional recognition of “a need for a curb on the
investigating powers of low-echelon revenue agents, and
considered that it met this need simply and fully by
requiring such agents to clear any repetitive examination
with a superior.” United States v. Powell, 379 U.S. 48, 55-
56 (1964); 61 Cong. Rec. 5855 (Sept. 28, 1921). The Powell
case involved the enforcement of a summons to appear before
a special agent and produce for reexamination certain
corporate records, on the ground that suspected fraud would
reopen the expired 3-year period of limitations on
assessment and collection. Section 7605(b) was considered
in that context to determine whether that section, either
alone or in conjunction with others, placed a probable cause
standard or other restrictions on the Commissioner’s agents
before a tax year may be reexamined. The Supreme Court
held, with respect to section 7605(b) that, generally, “no
severe restriction was intended”, and regarding unnecessary
examinations, courts are not required “to oversee the
Commissioner’s determinations to investigate.” United
States v. Powell, supra at 54, 56.
10This amount was arrived at by multiplying petitioner’s
total attorney’s fees by a fraction, the numerator of which is
the taxable portion of CASC 401(k) plan distribution and the
denominator of which is the total amount of the CASC 401(k) plan
distribution ($2,058.50 x ($51,497 � $77,000) = $1,377).
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