                        T.C. Memo. 2005-115



                      UNITED STATES TAX COURT



                 BARBARA A. OWEN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18856-02.              Filed May 19, 2005.


     Terri A. Merriam, Wendy S. Pearson, and Jennifer A. Gellner,

for petitioner.

     Robert V. Boeshaar and Julie L. Payne, for respondent.



                        MEMORANDUM OPINION


     MARVEL, Judge:   This case is before the Court on

petitioner’s motion for reasonable administrative and litigation

costs (motion) pursuant to section 7430 and Rule 231.1


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect at the time the petition was
filed, and all Rule references are to the Tax Court Rules of
                                                   (continued...)
                               - 2 -

Petitioner resided in Kennewick, Washington, when her petition in

this case was filed.

     On May 10, 2004, we filed the parties’ stipulation of

settlement and petitioner’s motion.    On August 5, 2004, we filed

respondent’s response to petitioner’s motion.    On September 15,

2004, we filed petitioner’s reply to respondent’s response and an

additional declaration in support of the reply.    On December 6,

2004, we ordered petitioner to submit an additional declaration

and supporting documentation to support the reasonableness of the

costs claimed.   On January 10, 2005, we received and filed

petitioner’s supplemental declaration, and on January 28, 2005,

we received and filed respondent’s supplemental response to

petitioner’s supplemental declaration.

     Neither party requested a hearing, and after reviewing the

relevant documents, we have concluded that a hearing on the

motion is not necessary.   See Rule 232(a)(2).   In disposing of

this motion, we rely on the parties’ filings and attached

exhibits.

                            Background

     In 1986, petitioner and her husband, Melvin L. Owen,

invested in a partnership called Timeshare Breeding Service 1985-

4, Ltd., also referred to as Durham Genetics Engineering 1985-4,



     1
      (...continued)
Practice and Procedure.
                               - 3 -

Ltd. (hereinafter DGE), which had been organized, promoted, and

operated by Walter J. Hoyt III.2    Petitioner and Mr. Owen held

partnership interests either jointly or as tenants in common in

three separate “series” of DGE partnership units.    Petitioner

wrote and signed numerous checks payable to DGE or the Hoyt

organization from her and Mr. Owen’s joint bank account and wrote

and signed several other checks drawn on her own account to

maintain their investment in DGE.    DGE issued Schedules K-1,

Partner’s Share of Income, Credits, Deductions, etc., for 1987 to

1995, which reflected that both petitioner and Mr. Owen were

partners in DGE.   In addition, in 1992, petitioner and Mr. Owen

signed a Power of Attorney and Debt Assumption Agreement in which




     2
      Walter J. Hoyt III also organized, promoted, operated, and
served as the general partner of more than 100 livestock breeding
limited partnerships from 1971 through 1998. See, e.g., River
City Ranches #1, Ltd. v. Commissioner, T.C. Memo. 2003-150, affd.
in part, revd. in part and remanded 401 F.3d 1136 (9th Cir.
2005). In general, the Hoyt partnerships purchased livestock
from related Hoyt entities for no money down and a promissory
note. See, e.g., Durham Farms #1, J.V. v. Commissioner, T.C.
Memo. 2000-159, affd. 59 Fed. Appx. 952 (9th Cir. 2003);
Shorthorn Genetic Engg. 1982-2, Ltd. v. Commissioner, T.C. Memo.
1996-515. The investors in the Hoyt partnerships assumed
personal liability for the partnerships’ promissory notes, made
payments on the notes to the Hoyt partnerships, see, e.g.,
Shorthorn Genetic Engg. 1982-2, Ltd. v. Commissioner, supra, and,
in return, deducted large partnership losses related to the
purchase, management, and sale of livestock, see River City
Ranches #1, Ltd. v. Commissioner, supra; Mekulsia v.
Commissioner, T.C. Memo. 2003-138, affd. 389 F.3d 601 (6th Cir.
2004); Durham Farms #1, J.V. v. Commissioner, supra; Shorthorn
Genetic Engg. 1982-2, Ltd. v. Commissioner, supra; Bales v.
Commissioner, T.C. Memo. 1989-568.
                               - 4 -

they appointed Mr. Hoyt to act on their behalf with regard to

partnership matters and reaffirmed their prior debt assumption

agreement with the Hoyt partnership.

     Petitioner and Mr. Owen filed joint Federal income tax

returns for 1982 through 1996 on which they claimed substantial

losses and an investment credit related to their DGE investment.

The DGE deductions and credits claimed by the Owens significantly

reduced their taxable income and overall Federal income tax

liabilities for 1982 through 1996.     As a result of our decision

in Shorthorn Genetic Engg. 1982-2, Ltd. v. Commissioner, T.C.

Memo. 1996-515, on July 18, 1997, petitioner and Mr. Owen entered

into a closing agreement with respondent concerning the tax

consequences of the DGE investment, which resulted in income tax

deficiencies for 1982 through 1995.3

     On April 29, 2000, Mr. Owen died.    On or about July 21,

2000, petitioner submitted Form 8857, Request for Innocent Spouse

Relief (And Separation of Liability and Equitable Relief), on

which she requested relief from joint and several liability for

1982 to 1997.   Petitioner attached a supporting statement to the

request in which she represented that she was not involved in the

DGE investment and did not financially benefit from it.

Petitioner argued that she met each requirement of section



     3
      Under the closing agreement, petitioners were not liable
for any deficiencies in income tax for 1996 or 1997.
                                 - 5 -

6015(b) and, in particular, that she had no knowledge or reason

to know of the understatement attributable to the Hoyt

partnership items on the joint returns.    Petitioner further

alleged that she was entitled to an allocation of liability under

section 6015(c) because she was no longer married, did not have

actual knowledge of any items giving rise to the deficiency when

she signed the returns, and all of the items giving rise to the

deficiency were allocable to Mr. Owen because he made the

decision to invest in DGE.   Petitioner also argued that she was

entitled to equitable relief under section 6015(f).

     On August 28, 2001, respondent sent petitioner a preliminary

determination denying petitioner’s request for relief under

section 6015(b), (c), and (f).     In the Form 886-A, Explanation of

Items, attached to the preliminary determination, respondent

explained the denial of relief under section 6015(c) as follows:

     We have concluded that you had actual knowledge of the
     item giving rise to the understatement. The following
     factors were considered in reaching this conclusion:

          •    You signed one or more
               partnership/subscription agreements/powers of
               attorney with respect to the Hoyt
               partnerships.

          •    You signed personal checks made payable to
               W.J. Hoyt Sons or other Hoyt entity [sic].

          •    You signed other correspondence/documents
               relating to the Hoyt partnerships.

          •    You are not eligible for relief under section
               6015(c) with respect to your own erroneous
               items and you have not shown that the
                                - 6 -

                 erroneous items are attributable to your
                 spouse.

Respondent advised petitioner of her right to administratively

appeal the decision but did not offer petitioner an Appeals

conference.

     On or about September 14, 2001, petitioner administratively

appealed respondent’s denial of relief from joint and several

liability.    Petitioner filed Form 12509, Statement of

Disagreement, in which she summarized the facts and law in

support of her request for relief.      Petitioner maintained that

all of the partnership items on the returns were items properly

allocable to her spouse for purposes of section 6015(c) and

reiterated the reasons why she did not have actual knowledge of

any items giving rise to the deficiency.      In addition, petitioner

stated that the burden of proof is on the Commissioner to show

actual knowledge, and she included a citation to King v.

Commissioner, 116 T.C. 198 (2001), which articulates a standard

for evaluating actual knowledge in erroneous deduction cases.

Petitioner’s statement further provided, in relevant part, as

follows:

     The fact that the electing spouse signed the
     partnership agreements, signed checks made payable to
     Hoyt, signed correspondence to Hoyt, or acquiesced to a
     joint investment with their spouse does not prove that
     the electing spouse had actual knowledge that the
     claimed items were not allowable. Moreover, the recent
     conviction and sentencing of Jay Hoyt shows
     affirmatively that the Barbaras [sic] had NO knowledge
     of the factual circumstances that made the deductions
                                - 7 -

       unallowable, because Hoyt engaged in a fraudulent
       scheme to deceive them and it was the fraudulent scheme
       that caused the tax items to be unallowable. The Hoyt
       investors were adjudged to be victims of a fraud, which
       by definition means they were deceived as to the nature
       of their investment and the facts giving rise to the
       disallowance of their investment related tax
       deductions.

The cover letter attached to petitioner’s administrative appeal

stated that “We will provide additional factual information once

we are contacted by the Appeals Officer.”

       On September 9, 2002, the Appeals Office issued a Notice of

Determination Concerning Your Request for Relief Under the

Equitable Relief Provision of Section 6015(f) (notice of

determination) denying petitioner’s request for relief under

section 6015.    Although the notice of determination referenced

only section 6015(f), the explanation of adjustments addressed

petitioner’s claim for relief under section 6015(b), (c), and

(f).    The explanation of adjustments stated as follows with

respect to petitioner’s request for relief under section 6015(c):

       IRC SECTION 6015(c)--Election to Allocate Deficiency

       This subsection is commonly called “separation of
       liability” which prorates a deficiency between spouses
       filing a joint return based on their proportionate
       share of earnings. Under this section, the requesting
       spouse must establish certain conditions before a
       relief [sic] can be granted. Even if you meet the
       requirements for being a widow, your request for
       separation of liability will not be granted because you
       had actual knowledge or the reason to know of the items
       giving rise to the deficiency that were allocable to
       your spouse. [Emphasis added.]
                                 - 8 -

     On December 6, 2002, we filed petitioner’s timely petition

seeking review of respondent’s determination pursuant to section

6015(e).   In the petition, petitioner alleged, in pertinent part,

that respondent erred in concluding that petitioner did not

qualify for relief under section 6015(c) and that “Respondent

made no effort to prove, and failed to prove, that Petitioner had

actual knowledge of the factual circumstances which made the tax

items unallowable as a deduction.”       As she did in her initial

request for relief and her administrative appeal, petitioner

included an extensive recitation of the facts on which she relied

to support her allegations, including the following:

     p.    Neither Petitioner nor Mr. Owen had actual
           knowledge of the underlying problems with the
           transactions, nor could they have discovered
           that Jay Hoyt failed to transfer title to
           livestock to the partnership and that he was
           otherwise converting partnership assets.

                     *   *   *    *      *   *   *

     q.    Due to the complexity of Jay Hoyt’s fraud, it was
           impossible for either Petitioner or Mr. Owen to
           discover the true nature of the transactions.

     r.    Mr. Owen and all other Hoyt investors were
           deceived by Jay Hoyt as to the nature of
           their investment and were ultimately
           determined by a court of law to be victims of
           his elaborate fraud.

     On February 27, 2003, we filed respondent’s answer in which

he denied each of petitioner’s allegations of error.       Respondent

also denied petitioner’s representations in subparagraphs p. and
                               - 9 -

r. based on lack of knowledge or information and denied the

representation in subparagraph q. without qualification.

     On February 23, 2004, this case was called for hearing

during the Court’s Seattle, Washington, trial session.   The

parties reported that they believed they had reached a basis for

settlement, and the case was scheduled for recall on March 2,

2004.   At the recall, the parties indicated on the record that

they had reached an agreement on the deficiencies but had not

settled the issue of penalties.   On March 3, 2004, the parties

reported that the case had been settled and requested until April

19, 2004, to submit a signed decision document.   In addition, the

parties agreed that the Court did not have jurisdiction over the

proposed addition to tax under section 6651(a)(3), and petitioner

stated on the record that she did not concede that the penalty

should be imposed.

     After issuing an order on April 26, 2004, extending the time

for the parties to submit a signed decision document, we filed

the parties’ signed stipulation of settlement on May 10, 2004.

The stipulation of settlement reflected that the parties had

agreed to a section 6015(c) allocation with respect to

petitioner’s and Mr. Owen’s Federal income tax liabilities as

follows:
                                - 10 -

               Joint tax liability         Petitioner’s share
     Year       before allocation          under sec. 6015(c)

     1982           $7,474.15                      -0-
     1983            7,153.00                      -0-
     1984            6,778.00                      -0-
     1985            5,029.00                  $1,398.06
     1986            7,190.00                      -0-
     1987            1,020.00                      -0-
     1988            3,907.00                   1,953.50
     1989            5,712.00                   2,856.00
     1990           10,957.00                   5,478.50
     1991            9,535.00                   4,767.50
     1992           10,521.00                   5,260.50
     1993            8,330.00                   4,165.00
     1994           13,827.00                   6,913.50
     1995            9,306.00                   4,653.00
     1996              -0-                         -0-
     1997              -0-                         -0-
                   106,739.15                  37,445.56

The allocation of liability under section 6015(c) was made by

treating petitioner’s and Mr. Owen’s DGE investment as a joint

investment, allocating 50 percent of the partnership items to

petitioner and 50 percent to Mr. Owen in accordance with section

6015(d)(1) and (d)(3)(A), and adjusting the allocation, as

required by section 6015(d)(3)(B), to account for the tax benefit

that petitioner’s share of the partnership items provided to Mr.

Owen on the joint returns.   The parties further agreed that

petitioner was not entitled to relief from joint and several

liability under section 6015(b) or (f).

     On May 10, 2004, we received and filed petitioner’s motion

for litigation and administrative costs.   In her motion,

petitioner asserts that she meets all of the requirements under

section 7430 to recover administrative and litigation costs in
                              - 11 -

the amount of $13,314.33.   The litigation and administrative

costs petitioner claims were computed using an hourly rate of

$195 for two of petitioner’s attorneys and included a claim of

$7,121.37 for petitioner’s alleged share of attorney’s fees (the

group fees) that her attorneys had charged to two groups of

similarly situated Hoyt investor clients with pending section

6015 claims.   In support of the motion, petitioner’s counsel

attached billing records for petitioner’s account dated September

10, 2002, to April 16, 2004, that described in detail the

attorney’s fees and costs petitioner incurred individually and

contained generic entries4 denoting monthly charges to

petitioner’s account for her alleged share of the group fees.

Although petitioner alleged that the group fees were reasonable

and that her share of the group fees had been reasonably

allocated to her, she did not include any supporting information

or documentation with respect to the group fees that showed the

nature of the work performed, the attorneys’ hourly rates, the

identity of the person who performed the work, the number of

hours billed for the work, the number of Hoyt investor clients

who shared in the group fees, or the manner in which the group



     4
      Although petitioner agrees that the fee summary for her
account attached to the motion describes her share of the “Group
Innocent Spouse fees” as “flat” fees, petitioner contends that
the flat fee reference is simply the way in which the Pearson-
Merriam (petitioner’s attorneys’ law firm) billing program
describes sum certain fees. Petitioner’s representation is
supported by a declaration of petitioner’s counsel.
                              - 12 -

fees were allocated among petitioner and the other Hoyt investor

clients of petitioner’s attorneys.

     On August 5, 2004, we filed respondent’s response to

petitioner’s motion, in which respondent objected to an award of

costs.   Petitioner requested and was granted leave to file a

reply to respondent’s response to the motion.   On September 15,

2004, we filed petitioner’s reply to respondent’s response, which

included a supplemental declaration but did not provide any

detailed information regarding petitioner’s counsel’s billing and

allocation arrangements with respect to the group fees.     On

December 6, 2004, we ordered petitioner to submit, on or before

January 7, 2005, an additional declaration with supporting

documentation to support her contention that the group fees were

reasonable and had been reasonably allocated and that her share

of the group fees was incurred in connection with this matter.

In the December 6, 2004, order, we also authorized respondent to

submit a supplemental response addressing the information

contained in petitioner’s supplemental declaration, on or before

January 31, 2005.

     On January 10, 2005, we received and filed petitioner’s

supplemental declaration, which contained billing records for

fees and costs petitioner’s attorneys had charged to common

accounts for two separate groups of Hoyt investor clients.       The

billing records provided specific information about the nature of
                              - 13 -

the work performed for the benefit of both groups of Hoyt

investor clients and included charges to common accounts that

were computed using an hourly rate of $195 for two of

petitioner’s attorneys.   On January 28, 2005, we received and

filed respondent’s supplemental response to petitioner’s

supplemental declaration.

                            Discussion

     Section 7430(a) authorizes the award of reasonable

administrative and litigation costs to the prevailing party in an

administrative or court proceeding brought by or against the

United States in connection with the determination of income tax.

In addition to being the prevailing party, in order to receive an

award of reasonable litigation costs, a taxpayer must exhaust

administrative remedies and not unreasonably protract the

administrative or court proceeding.    Sec. 7430(b)(1), (3).

Unless the taxpayer satisfies all of the section 7430

requirements, we do not award costs.     Minahan v. Commissioner, 88

T.C. 492, 497 (1987).

     Section 7430(c)(4)(A) and (B)(i) provides that a taxpayer is

a prevailing party if (1) the taxpayer substantially prevailed

with respect to the amount in controversy or the most significant

issue or set of issues, (2) the taxpayer meets the net worth

requirements of 28 U.S.C. section 2412(d)(2)(B) (2000), and (3)

the Commissioner’s position in the court proceeding was not
                                - 14 -

substantially justified.    See also sec. 301.7430-5(a), Proced. &

Admin. Regs.   Although the taxpayer has the burden of proving

that the taxpayer meets requirements (1) and (2), supra, the

Commissioner must show that the Commissioner’s position was

substantially justified.    See sec. 7430(c)(4)(B)(i); Rule 232(e).

     Respondent concedes that petitioner exhausted the available

administrative remedies as required by section 7430(b)(1), that

petitioner did not unreasonably protract the administrative or

court proceedings as required by section 7430(b)(3), and that

petitioner meets the net worth requirement of 28 U.S.C. section

2412(d)(2)(B).    In addition, respondent does not dispute that

petitioner substantially prevailed with respect to the amount in

controversy.     Respondent argues, however, that petitioner is not

the prevailing party because respondent’s position in the

administrative and judicial proceedings was substantially

justified and that the costs petitioner claims are unreasonable.

A.   Whether Respondent’s Administrative and Litigation Positions
     Were Substantially Justified

     For purposes of deciding a motion for reasonable

administrative costs, an administrative proceeding is a procedure

or action before the Internal Revenue Service (the Service), sec.

7430(c)(5), and the “position of the United States” in an

administrative proceeding refers to the position taken by the

Service as of the earlier of (i) the date the taxpayer receives

the notice of decision of the Internal Revenue Service Office of
                                - 15 -

Appeals, or (ii) the date of the notice of deficiency, sec.

7430(c)(7)(B); see also sec. 301.7430-3(a), (c), Proced. & Admin.

Regs.     In the present case, the relevant position is that taken

by the Appeals Office in the notice of determination dated

September 9, 2002.     Sec. 7430(c)(7)(B)(i).

     A court proceeding, for purposes of section 7430, means any

civil action brought in a court of the United States, including

this Court, sec. 7430(c)(6), and the “position of the United

States” in a court proceeding is the position taken by the

Service in a judicial proceeding to which section 7430(a)

applies, sec. 7430(c)(7)(A).     In this case, respondent’s

litigation position is that taken in his answer to petitioner’s

petition.     Sec. 7430(c)(7)(A); see Huffman v. Commissioner, 978

F.2d 1139, 1148 (9th Cir. 1992), affg. in part, revg. in part and

remanding T.C. Memo. 1991-144.

        Although respondent’s administrative and litigation

positions are often considered separately, we may consider them

together if respondent maintains the same position throughout the

administrative and litigation process.     Huffman v. Commissioner,

supra at 1144-1147; Maggie Mgmt. Co. v. Commissioner, 108 T.C.

430, 442 (1997); Livingston v. Commissioner, T.C. Memo. 2000-387.

In the present case, respondent’s position in both the notice of

determination and the answer was that petitioner’s election to

allocate the joint liability under section 6015(c) was invalid
                              - 16 -

because she had actual knowledge when she signed the returns of

any items giving rise to the deficiency that were allocable to

her spouse.

     The Commissioner’s position is substantially justified if it

has a reasonable basis in both fact and law and is justified to a

degree that could satisfy a reasonable person.   Huffman v.

Commissioner, supra at 1147 n.8 (citing Pierce v. Underwood, 487

U.S. 552, 565 (1988)); Maggie Mgmt. Co. v. Commissioner, supra at

443; sec. 301.7430-5(c)(1), Proced. & Admin. Regs.   The

reasonableness of respondent’s position turns on the available

facts that formed the basis for the position and any legal

precedents related to the case.   Maggie Mgmt. Co. v.

Commissioner, supra at 443; DeVenney v. Commissioner, 85 T.C.

927, 930 (1985).   A significant factor in determining whether the

Commissioner’s position is substantially justified as of a given

date is whether, on or before that date, the taxpayer has

presented all relevant information under the taxpayer’s control

and relevant legal arguments supporting the taxpayer’s position

to the appropriate Service personnel.5   Maggie Mgmt. Co. v.




     5
      “[A]ppropriate Internal Revenue Service personnel” are
those employees who are reviewing the taxpayer’s information or
arguments, or employees who, in the normal course of procedure
and administration, would transfer the information or arguments
to the reviewing employees. Sec. 301.7430-5(c)(1), Proced. &
Admin. Regs.
                                - 17 -

Commissioner, supra at 443; sec. 301.7430-5(c)(1), Proced. &

Admin. Regs.

     The only issue petitioner raises in her motion is whether

respondent’s position with respect to section 6015(c) was

substantially justified.     In deciding whether to award

administrative and litigation costs, therefore, we focus our

analysis on the reasonableness of respondent’s position with

respect to section 6015(c).

     1.    Section 6015(c)

     Under section 6015(c), if the requesting spouse is no longer

married to,6 or is legally separated from, the spouse with whom

she filed the joint return, the requesting spouse may elect to

limit her liability for a deficiency as provided in section

6015(d).   Sec. 6015(c)(1), (3)(A)(i)(I).    The election under

section 6015(c) must be made no later than 2 years after the

Secretary7 has begun collection activities with respect to the

electing spouse.   Sec. 6015(c)(3)(B).




     6
      A requesting spouse is no longer married if she is widowed.
Rosenthal v. Commissioner, T.C. Memo. 2004-89.
     7
      The term “Secretary” means “the Secretary of the Treasury
or his delegate”, sec. 7701(a)(11)(B), and the term “or his
delegate” means “any officer, employee, or agency of the Treasury
Department duly authorized by the Secretary of the Treasury
directly, or indirectly by one or more redelegations of
authority, to perform the function mentioned or described in the
context”, sec. 7701(a)(12)(A).
                                 - 18 -

     In general, section 6015(d) provides that any item giving

rise to a deficiency on a joint return shall be allocated to each

spouse as though they had filed separate returns, and the

requesting spouse shall be liable only for her proportionate

share of the deficiency that results from such allocation.       Sec.

6015(d)(1), (3)(A).   To the extent that the item giving rise to

the deficiency provided a tax benefit on the joint return to the

other spouse, the item shall be allocated to the other spouse in

computing his or her proportionate share of the deficiency.8

Sec. 6015(d)(3)(B); Hopkins v. Commissioner, 121 T.C. 73, 83-86

(2003).

     An election under section 6015(c) is invalid, however, if

the Secretary demonstrates that the requesting spouse had actual

knowledge, when signing the return, of any item giving rise to a

deficiency that is otherwise allocable to the nonrequesting

spouse.9   Sec. 6015(c)(3)(C).    In cases involving erroneous

deductions, an individual is deemed to have actual knowledge of

an item giving rise to a deficiency if she has actual knowledge

of the factual basis for the denial of the deductions.     King v.


     8
      In addition, the requesting spouse’s proportionate share of
the deficiency shall be increased by the value of any
disqualified asset transferred to her by the nonrequesting
spouse. Sec. 6015(c)(4).
     9
      An election under sec. 6015(c) is also invalid if the
Secretary demonstrates that assets were transferred between the
individuals filing the joint return as part of a fraudulent
scheme. Sec. 6015(c)(3)(A)(ii).
                              - 19 -

Commissioner, 116 T.C. at 204.   Although the requesting spouse

bears the burden of proving the portion of the deficiency that is

properly allocable to her, see sec. 6015(c)(2), respondent bears

the burden of proving that the requesting spouse had actual

knowledge of any items giving rise to the deficiency, sec.

6015(c)(3)(C).

     2.    Reasonableness of Respondent’s Position

     Respondent contends that the position taken in the notice of

determination was substantially justified because the information

available to the Appeals officer at the time led him to believe

that “petitioner had actual knowledge of the items giving rise to

the deficiencies”.   In arguing that the Appeals Office’s position

was reasonable, respondent explains that because the Appeals

officer determined that petitioner had actual knowledge, he did

not have to consider whether disqualified assets had been

transferred to petitioner, whether assets had been transferred

between petitioner and Mr. Owen as part of a fraudulent scheme,

or how the deficiencies in issue could be allocated under section

6015(d).

     Respondent further contends that the position in the answer

was substantially justified because (1) the information available

to him at the time showed that petitioner had knowledge of and

had been involved with the Hoyt organization, and (2) without

further factual development, it was impossible to determine
                             - 20 -

whether petitioner had actual knowledge, to confirm that no

disqualified assets had been transferred to petitioner, or to

confirm that no assets had been transferred between petitioner

and Mr. Owen as part of a fraudulent scheme.   Respondent also

argues that when the answer was filed, the deficiencies at issue

could not be allocated between petitioner and Mr. Owen under

section 6015(d) because the parties disagreed about whether and

to what extent the investment in DGE was attributable to

petitioner.

     We reject respondent’s justification for his administrative

and litigation position for several reasons.   First, respondent’s

argument that he lacked sufficient information to make a

determination under section 6015 and that the lack of information

was somehow petitioner’s fault is completely unsupported by the

record for purposes of this motion.   Petitioner attached to her

Form 8857, dated July 21, 2000, a detailed recitation of the

relevant facts supporting her request for relief.   In

petitioner’s statement of disagreement dated September 14, 2001,

appealing the Service’s denial of relief under section 6015,

petitioner stated that she had no actual knowledge of the items

giving rise to the liabilities in question and provided

respondent with another detailed statement of the facts in

support of her argument that she was entitled to section 6015(c)
                                - 21 -

relief.10    Petitioner also reminded the Appeals officer that the

burden of proof is on the Commissioner to show actual knowledge

and advised him of the proper standard for actual knowledge as

set forth in King v. Commissioner, supra at 204.    Further, in the

cover letter attached to the statement of disagreement,

petitioner offered to provide additional factual information to

the Appeals officer upon request.

     The Appeals Office issued its notice of determination nearly

1 year after petitioner submitted her September 14, 2001,

statement.    The record, however, does not disclose any effort by

the Appeals Office to request any additional factual information

from petitioner or to pose any questions to petitioner after the

September 14, 2001, statement of disagreement or before the

notice of determination was issued on September 9, 2002.

Respondent had ample opportunity to obtain the additional

information he felt he needed to accept petitioner’s

representations regarding the section 6015(c) requirements and

the exceptions to relief contained in section 6015(c)(3)(C), (4)

and (d)(3)(C) during the administrative proceeding, but he did

not request any additional information from petitioner until the

discovery phase of this case.    Respondent’s delay in obtaining


     10
      A party’s statement, if credible, is evidence on which the
finder of fact may rely to establish a relevant fact. In this
case, there is nothing in the record to suggest that petitioner’s
statement regarding her lack of actual knowledge was not
credible.
                              - 22 -

any additional information undermines his argument that, before

issuing the notice of determination or answering the petition, he

lacked the information necessary to make a determination under

section 6015(c).   Moreover, respondent’s failure to analyze the

effects of his administrative and litigation position in light of

the extensive factual information petitioner had provided

supports our conclusion that respondent’s position was not

substantially justified under the circumstances.   See Powers v.

Commissioner, 100 T.C. 457, 473 (1993) (Commissioner’s position

was not substantially justified because it had no factual basis,

and Commissioner made no attempt to obtain relevant information

before adopting his position), affd. in part, revd. in part, and

remanded in part 43 F.3d 172 (5th Cir. 1995).

     Second, in determining that petitioner had actual knowledge,

respondent failed to properly evaluate the standard for actual

knowledge articulated in King v. Commissioner, supra, and Mora v.

Commissioner, 117 T.C. 279 (2001), in light of the extensive

information he had acquired regarding the operation of the Hoyt

partnerships.   When the notice of determination was issued on

September 9, 2002, the Service had already entered into a

settlement agreement with Mr. Hoyt and was well aware of the

basis for adjusting the Hoyt partnership items at issue in this

case.   See River City Ranches #1, Ltd. v. Commissioner, T.C.

Memo. 2003-150, affd. in part, revd. in part and remanded 401
                              - 23 -

F.3d 1136 (9th Cir. 2005); Mekulsia v. Commissioner, T.C. Memo.

2003-138, affd. 389 F.3d 601 (6th Cir. 2004); Durham Farms #1,

J.V. v. Commissioner, T.C. Memo. 2000-159, affd. 59 Fed. Appx.

952 (9th Cir. 2003); Shorthorn Genetic Engg. 1982-2, Ltd. v.

Commissioner, T.C. Memo. 1996-515; Bales v. Commissioner, T.C.

Memo. 1989-568.   Moreover, it was a matter of public record when

respondent adopted his position that Mr. Hoyt had overstated the

number and value of cattle sold to the partnerships.11    See,

e.g., Mora v. Commissioner, supra at 292.

     In King v. Commissioner, supra at 204, we held that “the

proper application of the actual knowledge standard in section

6015(c)(3)(C), in the context of a disallowed deduction, requires

respondent to prove that petitioner had actual knowledge of the

factual circumstances which made the item unallowable as a

deduction.”   In other words, respondent had to prove that

petitioner knew the Hoyt organization had an insufficient number

of cattle to sustain the partnership deductions claimed on the

joint return and knowingly claimed improper deductions.    Nothing

in the record indicates, however, that respondent made any

reasonable effort to identify the grounds for the disallowance of

the Hoyt partnership losses and credits petitioner and Mr. Owen


     11
      By Sept. 9, 2002, Mr. Hoyt had been indicted, convicted,
and sentenced for his fraudulent activities with respect to the
Hoyt partnerships.
                              - 24 -

had claimed or to evaluate his ability to prove that petitioner

had actual knowledge of the factual circumstances that caused the

disallowance of the Hoyt partnership items before taking his

position in this case.   Respondent should have meaningfully

evaluated whether he could prove that petitioner had actual

knowledge by taking into account the information supplied by

petitioner, the extensive audit and litigating history regarding

the Hoyt organization and the Hoyt partnerships, and the specific

information regarding the manner in which the Hoyt organization

operated the Hoyt partnerships, including the ones in which

petitioner and Mr. Owen had invested.   The record does not

indicate that respondent considered any of the information that

was available to him in September 2002 before adopting his

administrative position.   Respondent’s failure to properly apply

the actual knowledge standard in the context of the information

he had acquired regarding Mr. Hoyt and the Hoyt organization in

this case cannot be rationalized.   Respondent’s lack of diligence

in evaluating his ability to prove actual knowledge, therefore,

was not justified.   See Stieha v. Commissioner, 89 T.C. 784, 791

(1987) (Commissioner’s lack of diligence in evaluating the impact

of recent court opinions not substantially justified).

     Third, the record discloses no meaningful effort by

respondent to properly analyze section 6015(c) with respect to

the position, as determined by respondent, that petitioner and
                               - 25 -

Mr. Owen had invested jointly in the Hoyt partnership.    In an

“EXPLANATION OF ITEMS” attached to the Appeals Transmittal and

Case Memo that was prepared with respect to petitioner’s section

6015 request, the Appeals Office took the position that “Joint

investments in the tax shelter partnerships are considered actual

knowledge and an erroneous item attributable to both spouses” and

determined that in the present case, “The taxpayers were into the

tax shelter jointly.   The erroneous item is attributable to

both.”    In addition, respondent admitted in the notice of

determination and in his response to petitioner’s motion that the

facts available to him suggested that the Owens invested jointly

in DGE.   Nevertheless, respondent failed to consider how the

deficiencies must be allocated between petitioner and her spouse

under section 6015(c) and (d) if respondent’s position regarding

their joint investment was correct.     If respondent had made the

allocation that flowed naturally from his position that the Owens

had invested jointly in DGE, he would necessarily have allocated

the Hoyt partnership items between petitioner and Mr. Owen in

accordance with their respective ownership interests.    Respondent

also likely would have realized that he had to prove petitioner

had actual knowledge of the reasons for disallowing Mr. Owen’s

allocable share of the Hoyt partnership items in order for

respondent to conclude that petitioner was not entitled to any

section 6015(c) relief.   Respondent’s failure to make an
                              - 26 -

allocation under section 6015(c) further demonstrates the

unreasonableness of his position.

     The fourth flaw in respondent’s position stems from his

failure to make a computation under section 6015(c) and (d) to

reflect his contention that the Owens’ partnership interest in

DGE was jointly owned.   Had respondent done so, the resulting

calculation would have shown substantially reduced tax

liabilities owed by petitioner after application of section

6015(c) and (d) and would have confirmed that petitioner

qualified for section 6015(c) relief.12   If respondent had then

conceded that petitioner was entitled to section 6015(c) relief

in the notice of determination or in his answer, the concession

might have enabled the parties to settle this case at a much

earlier date.13

     12
      Although respondent’s calculation would not have arrived
at the same tax liability numbers as those reflected in the
settlement because of respondent’s interpretation of sec.
6015(d)(3)(B), see Hopkins v. Commissioner, 121 T.C. 73 (2003),
the computation would nevertheless have confirmed that petitioner
was entitled to sec. 6015(c) relief. When our opinion in Hopkins
v. Commissioner, supra, rejecting respondent’s interpretation of
sec. 6015(d)(3)(B), was filed on July 29, 2003, respondent had
reason to know that the application of the tax benefit rule of
sec. 6015(d)(3)(B) might increase the relief available to
petitioner under sec. 6015(c). If respondent had revised his
calculation at that time (approximately 5 months after his answer
was filed), he would have arrived at the same tax liabilities as
those reflected in the settlement.
     13
      The fact that respondent eventually conceded that
petitioner was entitled to proportionate relief under sec.
6015(c) is a factor we may consider, although it is not
                                                   (continued...)
                              - 27 -

     3.   Conclusion

     We hold that respondent’s administrative and litigation

position was not reasonable under the circumstances and that,

therefore, it was not substantially justified.   Because

respondent’s position was not substantially justified, we

conclude that petitioner was the prevailing party as defined by

section 7430(c)(4)(A).

B.   Whether Costs Claimed by Petitioner Are Reasonable

     1.   Amount of Costs Claimed

     Section 7430 permits a taxpayer to recover both reasonable

administrative costs14 and reasonable litigation costs15.   The

amount of reasonable attorney’s fees that we may award is limited

     13
      (...continued)
determinative, in deciding whether respondent’s position was
substantially justified. Maggie Mgmt. Co. v. Commissioner, 108
T.C. 430 (1997); Powers v. Commissioner, 100 T.C. 457, 471 (1993)
affd. in part, revd. in part, and remanded in part 43 F.3d 172
(5th Cir. 1995).
     14
      Sec. 7430(c)(2) and (3) defines reasonable administrative
costs to include, in relevant part, any administrative fees or
charges imposed by the Internal Revenue Service and fees for the
services of an attorney (attorney’s fees), incurred on or after
the earliest of: (1) The date the taxpayer receives the Appeals
Office notice of decision, (2) the date of the notice of
deficiency, or (3) the date on which the first letter of proposed
deficiency allowing the taxpayer an opportunity for
administrative review with the Appeals Office is sent. Sec.
7430(c)(2).
     15
      Litigation costs are those costs incurred in connection
with a court proceeding. Sec. 7430(a)(2), (c)(1). Reasonable
litigation costs include, among other things, court costs and
fees paid or incurred for the services of attorneys. Sec.
7430(c)(1).
                              - 28 -

by statute and adjusted for cost of living.16   Sec.

7430(c)(1)(B)(iii) (and flush language).   A taxpayer may recover

attorney’s fees in excess of the statutory limit in the presence

of one or more of the following special factors:   (1) Limited

availability of qualified attorneys for the proceeding, (2)

difficulty of the issues presented in the case, or (3) local

availability of tax expertise.   Id.

     Pursuant to Rule 232(d), if the parties disagree as to the

amount of attorney’s fees that is reasonable, the moving party

must submit an additional affidavit that includes, in relevant

part, the following:   (1) A detailed summary of the time expended

by each individual for whom fees are sought, including a

description of the nature of the services performed during each

period of time; (2) a description of the fee arrangement with the

client; (3) a statement of whether a special factor exists that

justifies a rate in excess of the statutory limit; and (4) any

other information that will assist the Court in evaluating the

award of costs and fees.

      The amount of petitioner’s claim for administrative and

litigation costs includes the cost of professional services that

were charged by her attorneys to her individual account and her


     16
      For purposes of this motion, the statutory rate for
attorney’s fees is $150 per hour. See Rev. Proc. 2003-85, 2003-2
C.B. 1184, 1190; Rev. Proc. 2002-70, 2002-2 C.B. 845, 850; Rev.
Proc. 2001-59, 2001-2 C.B. 623, 628.
                               - 29 -

share of group fees that were charged to common accounts for the

benefit of several Hoyt investor clients, including petitioner.

The fees and costs petitioner claims are summarized as follows:

                           Time       Hourly
   Attorney/Item         expended      rate    Total cost

Wendy Pearson          10.0   hours     $195    $1,950.00
Terri Merriam           3.2   hours      195       624.00
Jennifer Gellner       16.6   hours      150     2,490.00
Jennifer Gellner        3.9   hours      110       429.00
Legal assistant         4.1   hours       75       307.50
Contract assistance     6.3   hours       50       315.00
Tax Court filing fee          --          --        60.00
Postage                       --          --         5.46
Online research               --          --        12.00
Share of group fees
     and costs1               --          --     7,121.37

                       Total fees and costs:    13,314.33
     1
      The amount petitioner claims for her share of the group
fees and costs represents charges to separate accounts for two
groups of Hoyt investor clients and includes attorney’s fees
billed at an hourly rate of $195 for some of petitioner’s
attorneys and the costs of contract assistance, online research,
postage, copies, and the attorneys’ hotels, meals, and parking,
as well as the costs of work performed by legal assistants.

     2.   The Parties’ Arguments

     Respondent contends that the costs petitioner claims are

unreasonable in that the hourly rate charged by some of

petitioner’s attorneys exceeds $150 per hour, and petitioner has

not shown that any of the three special factors enumerated in

section 7430(c)(1)(B)(iii) apply.     Respondent further argues that

costs petitioner claims for her share of the group fees are not

reasonable because (1) the method of billing does not properly

account for the time expended or hourly rate at which the work
                               - 30 -

was performed, and (2) the fees were charged for work that

contributed to the resolution of clients’ cases other than

petitioner’s and, therefore, were not “incurred in connection

with” petitioner’s administrative and court proceedings as

required by section 7430(a).

     Petitioner contends that an “informal survey” of local

attorneys shows that the prevailing hourly rate for attorneys

specializing in Federal tax practice in the Seattle, Washington,

area is between $225 and $350 and that billing at an hourly rate

that is less than the customary rate for similar work is a factor

that supports the reasonableness of the attorney’s fees.    With

respect to her share of the group fees, petitioner contends that

the group fees were charged to a group of Hoyt investor clients,

all of whom had pending section 6015 claims, for work relating to

common legal and factual issues that directly affected or

contributed to the resolution of each client’s case.

Petitioner’s counsel further contend that the group fee

arrangement allowed the Hoyt investor clients to obtain

professional advice and assistance at a reduced cost, that any

services related to the development of factual issues unique to a

particular client were charged only to the individual client, and

that no client was charged for work that did not directly benefit

the client’s case.
                                     - 31 -

        3.         Hourly Rate

     We first decide whether the hourly rate for the attorney’s

fees is reasonable.          In the absence of proof that a special

factor applies, petitioner may not recover attorney’s fees in

excess of the statutory limit.          See sec. 7430(c)(1)(B)(iii).

Petitioner does not argue, and has otherwise failed to

demonstrate, that there was a limited availability of qualified

attorneys or of attorneys with tax expertise to represent her in

this case or that the issues presented were sufficiently

difficult to support her claim for an enhanced hourly rate.            The

fact that petitioner’s attorneys billed her and the other Hoyt

investor clients for professional services at a rate lower than

the local customary rate does not establish that the fees

petitioner claims are reasonable.17           We conclude, therefore, that

petitioner may not recover attorney’s fees in excess of $150 per

hour.        Id.

        With respect to the attorney’s fees and costs charged to

petitioner’s individual account, we award petitioner $1,500 for

work performed by Ms. Pearson18 and $480 for work performed by



        17
      The existence of a prevailing hourly rate in the relevant
area that exceeds the statutory rate is not a special factor.
Pierce v. Underwood, 487 U.S. 552, 571-572 (1988); Foothill Ranch
Co. Pship. v. Commissioner, 110 T.C. 94, 102 (1998).
        18
      We compute the award of Ms. Pearson’s fees as follows:            10
hours multiplied by $150 hourly rate equals $1,500.
                                - 32 -

Ms. Merriam.19    Because Ms. Gellner’s hourly rate does not exceed

the statutory limit, we find that her fees are reasonable and

award petitioner $2,919 for Ms. Gellner’s professional services.

Respondent does not object to the reasonableness of the costs

petitioner claims for contract assistance, for filing fees, for

postage, for online research, and for the services of legal

assistants that were charged to her individual account.

Consequently, we award petitioner those costs in the amount of

$699.96.20

     4.      Allocation of Group Fees

     We next decide whether the attorney’s fees and costs for

petitioner’s share of the group fees are reasonable and were

reasonably allocated among petitioner and the other Hoyt investor

clients.     Section 7430(a) authorizes an award of reasonable

administrative and litigation costs incurred in connection with

an administrative or court proceeding brought by or against the


     19
      We compute the award of Ms. Merriam’s fees as follows:
3.2 hours multiplied by $150 hourly rate equals $480.
     20
      This figure includes the following costs: $307.50 for
legal assistants, $315 for contract assistance, $60 for Tax Court
filing fee, $5.46 for postage, and $12 for online research.

     Only costs for the services of an individual who is admitted
to practice before this Court or the Internal Revenue Service may
be awarded as attorney’s fees. Sec. 7430(c)(3)(A). We award
fees for work performed by legal assistants, therefore, as costs,
rather than as attorney’s fees. See Fields v. Commissioner, T.C.
Memo. 2002-320; O’Bryon v. Commissioner, T.C. Memo. 2000-379.
                              - 33 -

United States with respect to the determination, collection, or

refund of any tax.   In order for costs, including attorney’s

fees, to qualify as reasonable litigation or administrative

costs, they must come within the relevant definitions, sec.

7430(c)(1) and (2), and they must be incurred in connection with

a qualifying proceeding.

     Petitioner’s attorneys represent many Hoyt investors.    It is

not surprising or unreasonable that they would perform certain

legal work for the common benefit of similarly situated clients.

Under certain circumstances, it may be both efficient and

economical for an attorney to allocate the fees and costs for

legal research and other legal work benefiting several clients

equitably among those clients as long as the clients agree, the

fees and costs are reasonable, and the attorney appropriately

allocates the common legal work.   See, e.g., Minahan v.

Commissioner, 88 T.C. 516 (1987), and Minahan v. Commissioner, 88

T.C. 492 (1987), in which we allocated common costs among several

taxpayers who were represented by the same attorneys under an

agreement that provided for the sharing of costs.   Moreover,

legal work that benefits multiple clients is no less relevant to

an administrative or court proceeding than work performed solely

for one client.   If the work is performed for multiple clients

and enables an attorney to properly represent a particular client

in the administrative or court proceeding described in section
                                - 34 -

7430, the section 7430(a) requirement that the costs for such

work are “incurred in connection with” the proceeding would

appear to be satisfied.

     Petitioner’s counsel produced billing records for accounts

of two Hoyt investor client groups seeking relief from joint and

several liability to substantiate petitioner’s share of the group

fees.     The billing records for both group accounts identify the

attorneys who performed work on the section 6015 cases and set

forth the time expended by each attorney, the attorneys’ hourly

rates, and the nature of the work performed.21    Petitioner’s

counsel contend in their supporting declarations that one group

of Hoyt investors (the general group) ranged in size from 97 to

75 members during the 14-month period that petitioner

participated in the group fee arrangement and that petitioner’s

pro rata share of the general group’s fees was computed by

dividing the total monthly charges equally among all members of

the group.     Petitioner’s counsel further contend that there

existed a separate group of nine Hoyt investors, including

petitioner (the litigation group), whose cases were set for trial

during the Court’s February 2004 trial session and that the nine

Hoyt investors shared the total billing costs of trial

preparation equally, with the exception of approximately 15 hours


     21
      The billing records appear to be missing pages for the
month of December 2003, including the summary page of that
month’s total charges. See infra note 24.
                               - 35 -

that were allocated among the general group.    In addition,

petitioner’s counsel produced a spreadsheet demonstrating how the

total monthly fees incurred by the general group of Hoyt investor

clients in January 2004 were divided equally among petitioner and

the other participants.

     After reviewing the record, we conclude that petitioner’s

share of the group fees was incurred in connection with her

section 6015 proceeding, that petitioner has benefited from the

work her attorneys performed for both groups of Hoyt investor

clients, and that petitioner is entitled to recover a reasonable

share of the fees and costs she incurred as a member of each

group.    With respect to the litigation group of Hoyt investor

clients, we award petitioner $3,577.22, which represents a one-

ninth share of the attorney’s fees adjusted to an hourly rate of

$150 and costs.22


     22
      We compute petitioner’s share of the litigation group’s
fees and costs as follows: $37,667 (total fees and costs
incurred by litigation group), minus $13,962 (work performed by
attorneys at $195 hourly rate), plus $10,740 (total attorney’s
fees incurred at $195 hourly rate adjusted to hourly rate of
$150), minus $2,250 (15 hours of work performed at an hourly rate
of $150), divided by 9 (members of litigation group), equals
$3,577.22.

     We subtracted 15 hours of work performed at an hourly rate
of $150 in computing the total amount of fees and costs incurred
by the litigation group because petitioner’s counsel stated that
approximately 15 billable hours shown on the billing records of
the litigation group’s account were actually charged to the
members of the general group. Because petitioner’s counsel have
failed to identify the nature of the work or hourly rate for
                                                   (continued...)
                              - 36 -

     The problem with petitioner’s attempt to recover her

allocable portion of the general group’s fees and costs is that

the information provided does not enable us to fully evaluate the

reasonableness of the group fees or the reasonableness of the

allocation.   The composition of the general group of Hoyt

investors varied from month to month as clients chose to dismiss

their claims or became widowed or divorced and sought relief only

under section 6015(c).   Because the billing records for both

petitioner’s and the general group’s accounts lack detailed

information regarding the number of Hoyt investor clients who

participated in the fee arrangement in each of the relevant

months, it is impossible to verify that the generic monthly

charges for group fees that appear on the records for

petitioner’s individual account are reasonable and were

reasonably allocated among petitioner and the other Hoyt

investors clients.23



     22
      (...continued)
those 15 hours, we assume that they were billed at the highest
hourly rate allowed. Further, we do not add any charges for the
15 hours to the total costs and fees incurred by the general
group of Hoyt investors in computing petitioner’s share of that
group’s fees and costs because we lack any information about the
15 hours of work performed.
     23
      Had petitioner produced documentation for each month that
showed the number of clients who shared the fees, such as a
spreadsheet similar to that produced for the January 2004 fee
allocation, we could have properly determined whether the amount
of costs petitioner claims was reasonable.
                              - 37 -

     Petitioner bears the burden of proving that the amount of

the costs claimed is reasonable.    Rule 232(e); Powers v.

Commissioner, 100 T.C. at 491.   We conclude that because

petitioner has failed to fully substantiate her claim for a share

of the general group’s fees, she is entitled to recover only a

portion of the amount she claims.   For purposes of computing the

amount petitioner is entitled to recover, we shall assume that

the composition of the general group of Hoyt investor clients

remained constant at its greatest size, 97, throughout the 14-

month period that petitioner participated in the group fee

arrangement.   Accordingly, we award petitioner $2,301.95, which

represents a one-ninety-seventh share of the general group’s

attorney’s fees adjusted to an hourly rate of $150 and costs.24




     24
      Although the billing records submitted for the general
group’s account were incomplete, see supra note 21, we were able
to construct a complete set of billing records based on the
records submitted in related cases involving motions for
litigation costs that were filed by other members of the general
group of Hoyt investors. See Bulger v. Commissioner, docket No.
3829-03; Foy v. Commissioner, T.C. Memo. 2005-116. We take
judicial notice of the records submitted in these related cases
for purposes of computing the amount we award petitioner for her
share of the general group’s fees and costs. We compute
petitioner’s share of the general group’s fees and costs as
follows: $256,031.11 (total fees and costs incurred by general
group of Hoyt investors), minus $141,882 (attorney’s fees
incurred at hourly rate of $195), plus $109,140 (total attorney’s
fees incurred at $195 hourly rate adjusted to hourly rate of
$150), divided by 97 (members of Hoyt investor group), equals
$2,301.95.
                                  - 38 -

       5.   Conclusion

       To summarize, we award petitioner the following attorney’s

fees and costs:25

                             Time      Hourly
     Attorney/Item         expended     rate      Total cost

Wendy Pearson            10.00 hours       $150   $1,500.00
Terri Merriam             3.20 hours        150      480.00
Jennifer Gellner         16.60 hours        150    2,490.00
Jennifer Gellner          3.90 hours        110      429.00
Costs                        --              --      699.96
Share of Group Fees
     and Costs1              --              --     5,879.17

                Total fees and costs awarded:     11,478.13
       1
      Petitioner’s award for her share of group fees and costs
includes $3,577.22 (share of fees from litigation group of Hoyt
investors) and $2,301.95 (share of fees from general group of
Hoyt investors).

C.     Conclusion

       We have carefully considered all remaining arguments made by

the parties for results contrary to those expressed herein, and,

to the extent not discussed above, we find those arguments to be

irrelevant, moot, or without merit.




       25
      Respondent does not contend that the fees and costs at
issue here must be traced and allocated to the various positions
taken by the parties under sec. 6015, nor does he contend that
his positions under sec. 6015(b) and (f) were substantially
justified. Moreover, respondent’s failure to timely and properly
evaluate petitioner’s sec. 6015(c) argument, in our view, was
responsible for the legal work expended on arguments for relief
under sec. 6015(b) and (f). Consequently, we have not attempted
to allocate the fees and costs to the various arguments made by
the parties under sec. 6015.
                        - 39 -

To reflect the foregoing,



                                  An appropriate order and

                             decision will be entered.
