Proper Date to Measure Net Worth of Trust in Transferee Liability Case is Year Original Tax Assessed, Not Year Liability Assessed Against Alleged Transferee
The trust in the case of Alterman Trust v. Commissioner, 146 TC No. 14 had prevailed in its case against the IRS in its previous case (TC Memo 2015-231) and now sought an award of attorney’s fees under Section 7430.
The issue to be decided was when the trust’s net worth was to be measure to determine if the trust was simply “too large” to be awarded the fees under IRC Section 7430. While Section 7430 allows for an award of costs if the taxpayer is the prevailing party, has exhausted administrative remedies, has not unreasonably protracted the proceedings and has claimed reasonable costs, Section 7430(c)(4)(A)(ii) imposes an interesting quirk in the definition of “prevailing party.”
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