Neil Malcolm Cowie & Karen Christine Shunk, Petitioners

T .C . Memo . 2007-10 8

UNITED STATES TAX COUR T

NEIL MALL LM COWIE AND KAREN CHRISTINE SHUNK, Petitioners v . C MMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 1189-06 . Filed April 30, 2007 .

Neil Malcolm Cowie and Karen Christine Shunk, pro se .

William J . Gregg , for respondent .

MEMORANDUM OPINIO N

WELLS ,

Judge : The instant matter is before the Court o n petitioners' motion for reasonable administrative and litigatio n

SERVED APR 3 0 2007

costs'pursuant to Rule 2312 and section 7430 . The issues we must decide are whether petitioners were the prevailing party within the meaning of section 7430 and whether petitioners have substantiated any recoverable costs . For the reasons stated below, petitioners' motion for reasonable costs will be denied .

Background At the time of filing the petition, petitioners resided in Washington, D .C . Petitioner Neil M . Cowie (Mr . Cowie) is an attorney licensed to practice law in the Commonwealth of Virginia . Petitioners proceeded pro se at all times relevant to the instant motion .

Mr . Cowie and his father, Dr . James B . Cowie (Dr . Cowie), agreed in August-1998 that Mr . Cowie would invest funds provided by Dr . Cowie for Dr . Cowie's benefit . To avoid paying two sets of transaction fees and to save time, Mr . Cowie deposited funds provided by Dr . Cowie into Mr . Cowie's existing brokerage account .

'Although petitioners titled the instant motion "MOTION FOR LITIGATION COSTS", it appears that petitioners are seeking both administrative and litigation costs . We will consider th e instant motion as a motion for both administrative and litigation costs .

'Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code, as amended .

ie provided regular reports regarding the investment s Likewise, Mr . Cowie provided the informatio n r Dr . Cowie to complete his annual tax returns .

Mr . Co ie and Dr . Cowie reported their respective shares of the taxable transactions from Mr . Cowie's brokerage account on their tax r turns . The brokerage firm, however, issued only one Form 1099- , Proceeds From Broker and Barter Exchange Transactio s 2003, to Mr . Cowie reporting all of the account's taxable ac ivity .

On Fe ruary 7, 2005, respondent sent petitioners a draft CP2501 not ce listing 75 items where a discrepancy occurred between th amounts reported by the brokerage firm on Form 1099-B, an those reported on petitioners' return for taxable year 2003 . On March 31, 2005, petitioners responded, stating that the f 11 amount of each transaction was reported by Mr .

Cowie and r . Cowie on their respective returns and providing supportin information .

Peti ioners received a CP2000 notice dated June 20, 2005, stating t at respondent had not received a response to the February , 2005, notice . On June 22, 2005, petitioners sent their res onse again . Subsequently, petitioners received a letter da ed August 22, 2005, that requested that petitioners provide i formation on a completed Schedule D, Capital Gains and Losses .

On September 2, 2005, petitioners telephoned the Internal Revenue Service ( IRS) to determine what additional information was needed . The IRS representative indicated that petitioners should provide Dr . Cowie's name, address , and Social Security number . Petitioners allege they sent the IRS a facsimile with Dr . Cowie's information on September 5, 2005 .

The September 5, 2005, facsimile was not in the administrative file when respondent answered the petition .

Respondent's counsel received this facsimile from petitioners on March 13, 2006 .

Respondent ' s counsel forwarded this facsimile to the Appeals Office .

On October 17, 2005, respondent issued a statutory notice of deficiency to petitioners . The notice determined income tax due and an addition to tax for taxable year 2003 . Respondent based the determination on information from third-party payors which indicated that petitioners underreported interest, dividend, and capital gain income of $2,180, $1,016, and $287,110, respectively .

The underreported income resulted in a determined deficiency of $ 98,541, plus penalties and interest of $19,708 .

On January 17, 2006, petitioners filed their petition . On October 4, 2006, the parties filed a stipulation with the Court disposing of all of the issues raised in the notice of deficiency .

On January 12, 2007, petitioners filed the instant motion .

5 - Discussion The revailing party in a Tax Court proceeding may be entitled to recover administrative and litigation costs . See sec .

7430 (a) ; R le 231 . However, a taxpayer will not be treated as the prevailing party if the Commissioner's position was substantiall y justified .

Sec . 7430(c)(4)(B) ; see Pierce v . Underwood , 487 U .S .

552, 565 ( 988) . The fact that the Commissioner concedes is no t determinat ve of the reasonableness of the Commissioner' s position .

Wasie v . Commissioner , 86 T .C . 962, 969 (1986) . The taxpayer b ars the burden of proving he meets the requirements i n section 743 0 for an award of costs, except that the taxpayer wil l not be trea ed as the prevailing party if the Commissioner establishes that the position of the Commissioner wa s substantia l y justified . See Rule 232 (e) .

The Co rt determines the reasonableness of respondent's position as of the time respondent took the position . Sec .

7430(c)(7) .

Respondent took a position in the administrative proceeding s of the date of the notice of deficiency . Sec .

7430(c) (7) (B ) . In the judicial proceeding, respondent took a position whe respondent filed the answer . Sec . 7430(c)(7)(A) ; Huffman v . Commissioner , 978 F .2d 1139, 1144-1147 (9th Cir . 1992) , affg . in pa r revg . in part on other grounds and remanding T .C .

Memo . 1991-14 4 Respondent's administrative and litigatio n positions ar substantially justified if they have a reasonable basis in both law and fact . See Maggie Mgmt . Co . v . Commissioner , 108 T .C . 430, 443 (1997) . Respondent is entitled to a reasonable amount of time to evaluate information before changing his position or conceding an issue . See Sokol v . Commissioner , 92 T .C . 760, 766-768 (1989) .

We conclude that respondent's position was reasonable and substantially justified in both the administrative and litigation proceedings . A significant factor in determining whether the Commissioner's position is substantially justified as of a given date is whether the taxpayer has presented all relevant information under the taxpayer's control to the appropriate IRS personnel . Sec . 301 .7430-5(c)(1), Proced . & Admin . Regs .

Petitioners failed to provide the requisite information about Dr .

Cowie for respondent to verify that all the income from the brokerage account had been reported before September 5, 2005, Petitioners allege that on that date they sent to respondent a facsimile containing that information, but respondent's counsel did not have that information until after the answer was filed .

Once respondent's counsel sent the requisite information to the Appeals office, respondent conceded the instant case .

Accordingly, we hold that respondent's position in the administrative and litigation proceedings was substantially justified, and that petitioners are not entitled to recover their administrative or litigation costs .

Peti ioners bear the burden of proving the reasonableness of the costs claimed . See Rule 232(e) ; Powers v . Commissioner , 100 T .C . 457, 491 ( 1993 ), affd ., in part , revd . in part and remanded

Frisch v . Commissioner , 87 T .C . 838 ( 1986 ) .

Congress intended section 7430 as a fee shifting statute .

d . at 840 . However , petitioners "did not pay or incur fees for 1 gal services " .

Id . at 846 .

Additionally, petitioners did not specify an award amount .

The motion1lists only "at least 15 hours on the telephone", "a t least twen y five hours generating the Petition", "at least ten hours gene ating this motion", and "many additional hours marshallin and copying paperwork" . The recitation of time spent does not i clude dates or descriptions of the work done .

Petitioner argue that Mr . Cowie's time is worth at leas t $125 per ho r .

3$125, s increased by a cost-of-living adjustment, is the maximum hou ly rate provided in sec . 7430(c)(1)(B)(iii), absent special cir umstances .

We have considered all of petitioners' contentions, and, to the extent they are not addressed herein, they are irrelevant, moot, or without merit .

To reflect the foregoing, An appropriate order an d decision will be entered .

43. F .3d 1 2 (5th Cir . 1995 ) . Petitioners proceeded pro se . A pro se litiga t, even though an attorney , is not entitled to an award of attorn y's fees under section 7430 .