- 89 -
that funded an additional fee payment to Decastro later in 1993
and still left over something that was retained by the Thompsons.
Respondent argues that, because none of the other
petitioners (test case or nontest case) incurred attorney’s fees
for the test case trial (all such fees were paid by Kersting),
those petitioners would receive an economic windfall if we were
to use the actual 62-percent reduction in the Thompsons’ 1979-
1981 deficiencies as the starting point for our remedy.
Respondent reasons that the 62-percent characterization would
provide a benefit to petitioners (the reduction in their proposed
deficiencies by an additional 42 percent) that the Thompsons did
not enjoy due to their implicit obligation to turn over the bulk
of the resulting refunds to DeCastro as payment for legal
services that conferred no discernible benefit to them.
Respondent further argues that the relatively small portion of
the refunds of tax and interest ultimately retained by the
Thompsons ($17,224.61 out of $98,449.61) is rendered even more
insignificant by the fact that the Thompsons reported almost
twice that amount ($33,966.68) as gross interest income received
from the IRS in 1993 on which they paid tax.50 In sum,
respondent argues, the sweetener embodied in the final settlement
50 Respondent overlooks the fact that the refunds of
$33,966.68 of taxable interest income reported by the Thompsons
for 1993 were substantially exceeded by the $51,000 deduction for
legal fees claimed by and allowed to them for that year.
Page: Previous 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 NextLast modified: May 25, 2011