1987 Tax Ct. Memo LEXIS 557 | Tax Ct. | 1987
1987 Tax Ct. Memo LEXIS 557">*557
MEMORANDUM FINDINGS OF FACT AND OPINION
WHITAKER,
This case is presently before the Court on petitioner's motion pursuant to section 7430 1 for an award of reasonable litigation costs. By notice dated December 12, 1983, respondent determined deficiencies in petitioner's Federal income tax as follows:
Additions to Tax | |||
Section | Section | ||
Fiscal Year Ended | Deficiency | 6653(a)(1) | 6653(a)(2) |
3/31/81 | $ 3,821 | $ 191 | 0 |
3/31/82 | 2,852 | 143 | 50% of int. |
due on $ 2,852 |
Respondent's determination of deficiency resulted from his determination that petitioner was not entitled to deductions for "contracted administration" of $ 22,475 for the fiscal year ended March 31, 1981, and $ 16,754 for the fiscal year ended March 21, 1982. On brief, respondent conceded that petitioner was1987 Tax Ct. Memo LEXIS 557">*559 entitled to these deductions as ordinary and necessary business expenses. Petitioner filed its motion for reasonable litigation costs on September 23, 1985.
Petitioner's motion may be disposed of as not in compliance with Rule 231(a)(2) in that it was filed on September 25, 1985, which was prior to the 30-day period following service of a written opinion determining the issues in the case. See
Section 7430 provides that the prevailing party in civil tax cases may be awarded a judgment for reasonable litigation costs. The term "prevailing party" is defined in section 7430(c)(2) as a party that establishes that the position of the United States in the civil proceeding was unreasonable 2 and has either substantially prevailed with respect to the amount in controversy or has substantially prevailed with respect to the most significant issue presented. Respondent's position in this1987 Tax Ct. Memo LEXIS 557">*560 case was nothing if not reasonable. As we found in our previous opinion, Kenneth A. Stoecklin, sole shareholder of petitioner, exercised complete control over petitioner. His refusal and hence petitioner's refusal to explain the nature of the "contracted administration" deduction led to respondent's determination of deficiency. 3 Upon discovering the nature of petitioner's "contracted administration" deduction, respondent was most timely in conceding the issue. Therefore, petitioner's motion must be denied.
*561
Footnotes
1. All section references are to the Internal Revenue Code of 1954, as amended and in effect during the years in issue, and all Rule reference are to the Tax Court Rules of Practice and Procedure. ↩
2. The reasonableness standard of sec. 7430(c)(2) was amended by sec. 1551(d), Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752, to allow an award of reasonable litigation costs when the Government's position is not substantially justified. The amendment applies to actions commenced after December 31, 1985. The amendment is more in the nature of form than substance, and our decision here would not change were we operating under it. See
(filed July 9, 1987), slip op. at 9.Sher v. Commissioner,↩ 89 T.C.3. We note that sec. 7430(b)(4), as added by sec. 1551(b), Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2752, denies any award for litigation costs in civil action commenced after December 31, 1985, where the prevailing party has unreasonably protracted such proceeding. ↩