Daniel R. Allemeier, Jr. - Page 3

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               We ruled in petitioner’s favor regarding petitioner’s MBA-             
          related expense deductions and the accuracy-related penalty but             
          denied petitioner deductions for other claimed business expenses            
          because petitioner failed to substantiate the expenses in                   
          Allemeier I.  Petitioner then submitted a motion for litigation             
          costs, and respondent filed a response.4  Respondent agrees that            
          petitioner:  (1) Has not unreasonably protracted the court                  
          proceedings; (2) has substantially prevailed with respect to the            
          amount in controversy and with respect to the most significant              
          issue presented in the court proceedings; and (3) has met the net           
          worth requirements as provided by law.  Respondent disputes,                
          however, that petitioner exhausted all administrative remedies,             
          that petitioner was the prevailing party, and that petitioner’s             
          litigation fees are reasonable.                                             
               Neither party requested a hearing on this motion, and the              
          Court concludes that a hearing is not necessary to decide this              
          motion.  See Rule 232(a)(2).  Accordingly, the Court rules on               
          petitioner’s motion based on the parties’ submissions and the               
          record in this case.                                                        
                                     Discussion                                       
               We must determine whether petitioner is entitled to recover            
          reasonable litigation costs.  A taxpayer may recover reasonable             


               4Petitioner filed a reply to respondent’s response that the            
          Court did not direct petitioner to file.  See Rule 232(a).  The             
          reply raised no additional issues.                                          




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