Gabino Diaz - Page 4

          respondent during the audit did not adequately substantiate                 
          petitioner’s claimed deductions.                                            
               Before the scheduled trial date, the case was referred back            
          to respondent’s Appeals Office, and petitioner submitted                    
          additional documentation relating to petitioner’s claimed                   
          deductions.  A number of conferences occurred in which                      
          petitioner’s counsel met with respondent’s Appeals officer and              
          discussed the deductions in question and explained the                      
          documentation that had been submitted.                                      
               On February 16, 2007, respondent agreed to settle, and                 
          petitioner and respondent stipulated that $30,905 of the total              
          $36,182 claimed Schedule A deductions that had been disallowed              
          were allowable and that all other issues were resolved.                     
               On March 12, 2007, petitioner filed a motion for litigation            
          costs requesting reimbursement for legal fees incurred by                   
               Generally, under section 7430 a taxpayer may recover from              
          respondent costs relating to litigation in which the taxpayer               
          substantially prevails.                                                     
               Recoverable litigation costs include court costs and                   
          reasonable attorney’s fees.  Sec. 7430(c)(1); Dunaway v.                    
          Commissioner, 124 T.C. 80 (2005).  Litigation costs may be                  
          awarded if, among other things, the taxpayer:  (1) Is the                   

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Last modified: November 10, 2007