Ragan v. Commissioner

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 99-60209

JACQUELINE RAGAN,
Petitioner-Appellant,

versus

COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.

Appeal from the Decision of the
United States Tax Court

April 21, 2000
Before POLITZ, JOHN R. GIBSON,* and HIGGINBOTHAM, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Jacqueline Ragan appeals the Tax Court’s rulings on her
motions for attorney fees and litigation expenses incurred in
successfully defending claims made by the IRS which were not
substantially justified. We find that the Tax Court abused its
discretion in calculating some portions of Jacqueline Ragan’s fees.
Consequently, we AFFIRM in part and REVERSE in part, calculating
the final fee award to be $52,844.59.

I
This appeal follows our previous remand to the Tax Court in
Ragan v. Commissioner1 (Ragan I). On remand, the Tax Court was

*
Circuit Judge of the Eighth Circuit, sitting by designation.
1
135 F.3d 329 (5th Cir. 1998).
ordered to recalculate Jacqueline Ragan’s award of I.R.C. § 7430
litigation fees and expenses she incurred because of IRS demands
which were not substantially justified.2
On April 27, 1990, the IRS sent Jacqueline Ragan (Jackie) a
statutory notice of deficiency for more than $1.7 million in taxes,
interest, and penalties for 1980-82. The notice also demanded that
Jackie repay approximately $50,000 for an “erroneous” refund that
the IRS had paid to Jackie’s husband David’s bankruptcy estate.
On July 30, 1990, Jackie filed a petition in the Tax Court
contesting the deficiency and asserting that she was entitled to
one-half of the refund. On September 29, 1992, the IRS sent Jackie
and David a letter that there was “no-change” in their tax
liabilities for 1980-84. It was not until approximately July of
1993, however, that the IRS Appeals Division unofficially proposed
a settlement showing that Jackie was not liable for any
deficiencies. Further, this settlement was not official until
October 8, 1993, approximately two weeks before the scheduled
trial.
Thus, in the end, the Commissioner’s more than $1.7 million in
claimed back taxes, penalties, and interest had been reduced to
nothing. Jackie continued to pursue her claim for one-half of the
$50,000 refund, although the Tax Court held and this court affirmed
in Ragan I that she was not entitled to half of the $50,000
refund.3
On August 30, 1995, Jackie filed an I.R.C. § 7430 petition for
attorney and accounting fees and expenses totaling approximately

2
Id. at 338.
3
Id.

2
$155,000. In response to Jackie’s petition, the Commissioner
admitted that Jackie had substantially prevailed and that the
Commissioner was not substantially justified in most but not all of
the asserted deficiencies.4 The Tax Court then requested Jackie’s
attorney and accountant to prepare supplemental affidavits
explaining the basis for Jackie’s fee request. After receiving
those affidavits, however, the Tax Court awarded Jackie less than
$1,800 in fees and expenses.5
Jackie appealed the award to this court. In our decision,
this court held that the IRS was not substantially justified in
demanding that Jackie repay the entire 1980 refund it had
“erroneously” paid to David’s bankruptcy estate.6 As such, Jackie
was entitled to an award of attorney fees and litigation expenses
incurred in defending against the IRS refund demand, including fees
and expenses incurred in her motions for fees, also known as “fees
for fees.” This court also held that Jackie should not have been
denied her other fees because of inadequate documentation, and
remanded for a new calculation.7
On remand, Jackie requested additional litigation costs of
over $35,000 incurred in preparing her original fee request, in
addition to the approximately $155,000 sought originally for the
substantive litigation work. Out of the nearly $190,000 sought on

4
The issues on which Jackie had prevailed and which the IRS did not have
substantial justification included: (1) Schedule F farm/horse breeding losses;
(2) tax consequences of trading in government securities; and (3) tax penalties,
except to the extent related to DOT and Salmonella issues.
5
See Ragan I, 135 F.3d at 332.
6
See id. at 335.
7
See id. at 336-38.

3
remand, the Tax Court completely denied the new $35,000 request as
untimely and awarded Jackie just over $19,000 with respect to the
original request. Jackie appeals once again from the Tax Court’s
calculation.

II
On remand, Jackie requested litigation costs associated with
the portions of the preparation of her original fee request,
commonly known as “fees for fees.” The Tax Court denied these fee
requests as untimely, stating that Jackie should have requested
these fees within thirty days of the Tax Court’s original fee award
decision. In this appeal, Jackie first challenges the Tax Court’s
determination regarding the timing of her fees for fees request.
We review the Tax Court’s award of attorney fees for abuse of
discretion and its subsidiary findings of fact for clear error.8
We review the Tax Court’s interpretation of the applicable law and
statutes de novo.9
Normally, a party can request fees only if she substantially
prevails on the amount in controversy or the most significant issue
or set of issues presented.10 At that point, a party has thirty
days to submit a fee request after the decision giving rise to the
right to fees.11 In her final original fee request, Jackie did not
request “fees for fees.”12 However, the Tax Court’s original

8
See Powers v. Commissioner, 43 F.3d 172, 179 (5th Cir. 1995).
9
See Vinson & Elkins v. Commissioner, 7 F.3d 1235, 1237 (5th Cir. 1993).
10
See Ragan I, 135 F.3d at 334.

11
See Tax Ct. R. 231(b).

12
Apparently, in her original, but not final, fee request, Jackie did request
“fees for fees” for Rose, but then inexplicably, Rose removed those fees from his
first supplemental affidavit, which “finalized” Jackie’s original fee request.

4
assessment of Jackie’s fee request awarded Jackie less than $1,800
out of nearly $155,000 requested.
Thus, according to Jackie, she had not “substantially
prevailed” on her original request for § 7430 fees; therefore, she
had no basis to claim “fees for fees” at that time. Instead, it
was not until this court reversed the Tax Court’s decision that
Jackie potentially had a legal basis for requesting additional fees
for preparing the earlier fee petition. Then, on July 20, 1998,
Jackie submitted a second Supplemental Affidavit from her attorney,
(Bruce Rose) and accounting firm (McEvoy & Co.), setting forth the
fees and expenses they incurred in preparing their original
Supplemental Affidavits pursuant to the Tax Court’s April 29, 1996
order.13
The IRS claims that Jackie is not entitled to seek these fees
on remand because they were not raised in the first appeal, and
thus not within the scope of the order on remand.14
In her prior appeal, however, Jackie did request the right to
submit a § 7430 petition for “fees for fees” if our court ruled in
her favor.15 Furthermore, our decision in Ragan I did not shut this
door.16 Instead, the language of this court specifically suggested

13
These affidavits showed that Rose expended 84.75 hours to prepare Jackie’s fee
request. McEvoy & Co. claimed the following rates and time for the fee request:
Chase McEvoy, 46 hours, $120/hour; Atchison, 58 hours, $65/hour; and Trevett,
22.5 hours, $45/hour. All told, McEvoy claimed approximately $10,300 in fees
for fees, while Rose expended 84.75 hours. Jackie incurred an additional
$1,192.04, primarily in copying costs, associated with these fee requests.

14
See United States v. Marmolejo, 139 F.3d 528 (5th Cir.), cert. denied, 119 S.
Ct. 622 (1998); United States v. Adesida, 129 F.3d 846, 849-50 (6th Cir. 1988).
15
See Ragan I, Appellant’s Brief, n.9.
16
See 135 F.3d at 335.

5
that Jackie could receive her § 7340 “fees for fees” on remand.17
The IRS claims that the “substantially prevailed” requirement
only pertains to the merits of a case and not the right to fees,
yet cites no authority for this proposition. At best, the IRS
makes a policy argument that “fees for fees” should be requested at
the time of the original fee request in order to prevent a
cascading, “ad infinitum” series of fee requests, in which a party
first requests fees, then later requests “fees for fees,” and then
later requests “fees for ‘fees for fees,’” and so on.
Clearly, prior cases grant “fees for fees” when requested
alongside the original fee petition.18 However, the danger of
infinite, but decreasing, fee requests is more illusory than real.
Attorneys have sufficient motivation to request their fees up front
whenever possible. Moreover, such fees were explicitly within the
scope of the remand order. Thus, we hold that under these limited
circumstances Jackie’s request for “fees for fees” should not have
been considered untimely.
This request included a claim of 84.75 hours related to the
preparation of Rose’s first supplemental affidavit. The fact that
Rose spent this much time on the affidavit is unrebutted, but the
government claims it was an unreasonable amount of time. The
actual affidavit itself was nearly 40 pages long and included over
100 pages of exhibits. This affidavit required Rose to explain in
detail Rose’s billing and work practices, including his method of
keeping real-time contemporaneous time records, a chronology of his

17
See id. at 336 (holding that Jackie’s attorney “Rose . . . dedicated time to
issues in Jackie’s case for which she is entitled an award of attorneys’ fees,
such as . . . preparing the § 7340 petition.” (emphasis added)).
18
See, e.g., Powers, 43 F.3d at 179-80.

6
involvement in the case, and a response to the IRS’s fee
objections.
We agree that 84.75 hours is a considerable amount of time to
prepare an affidavit, but the Tax Court apparently demanded some
detail before determining Rose’s fee award. We find, however, that
approximately 15.25 of those hours related to a sanctions motion or
matters pertaining solely to Jackie’s husband David. Thus, we find
that Jackie is only entitled to recover a reasonable fee for 69.5
hours.
In terms of Rose’s hourly rate, this court has already held
that an attorney is not entitled to a special factor enhancement
for time spent preparing fee petitions.19 Thus, the statutory rate
(adjusted for the cost of living) applies. That adjusted rate for
the year in which this work was performed was $98/hour.20 Thus, the
fee award for this portion amounts to $6,811.
On remand, the Tax Court’s found that only 54 of Rose’s
claimed 140 hours for substantive work should be compensated. The
rest were held to be uncompensable or labeled as excessive,
duplicative, or unnecessary. The IRS concedes, however, that the
Tax Court based this assessment on an erroneous review of Rose’s
original fee request of 231.5 hours rather than his amended fee
request of 140 hours (from which Rose had removed hours which were
not compensable).
In its original January 23, 1997 Order, the Tax Court

19
See id. at 183.

20
Cf. Perales v. Casillas, 950 F.2d 1066, 1075-76 (5th Cir. 1992) (requiring
that under the Equal Access to Justice Act, a statutory fee award must be based
on the statutory rate of the year in which services were rendered so as to avoid
an impermissible interest charge against the United States).

7
precluded any fees and expenses for Rose and Jackie’s accounting
firm McEvoy & Co. because they were not admitted to practice before
the Tax Court. This court rejected that holding and held that Rose
was entitled to recover for work done on Jackie’s case and McEvoy
& Co. was entitled to its fees and expenses as well.21
On remand, and at the IRS’s request, the Tax Court again
interpreted § 7430 to preclude an award of fees and costs to an
attorney who is not authorized to practice before the Tax Court,
claiming that § 7430(c)(3) defines attorney fees as “fees for the
services of an individual . . . who is authorized to practice
before the Tax Court.”
The actual language of § 7430(c)(3), however, only states that
fees for an individual who is authorized to practice before the Tax
Court shall be considered attorney fees whether or not that
individual is an attorney. But the language in no way limits
attorney fees to those who are authorized to practice before the
Tax Court. Instead, the language is plainly worded to merely
ensure than non-attorneys who are admitted to practice before the
Tax Court also get compensated as attorneys.
The Tax Court’s determination that only 54 of Rose’s hours are
reimbursable is thus clearly erroneous because it looked at the
wrong fee request and because it misinterpreted § 7340. On appeal,
the IRS has finally dropped its erroneous interpretation of § 7430,
but still claims that the Tax Court’s finding of 54 hours should be
affirmed simply because Rose’s claimed 140 hours are excessive.
The Tax Court held that Rose expended only 1 hour on the
refund issue on which this court specifically directed the Tax

21
See Ragan I, 135 F.3d at 336-37.

8
Court to award fees.22 Rose’s uncontradicted affidavit shows he
expended 14.5 hours. The IRS claims these hours were wasted, but
in fact they represented an effort to eliminate the refund issue in
this case by involving the Bankruptcy Court. This effort was
eventually abandoned by Rose, but that does not mean it was an
unreasonable attempt to resolve an issue which the IRS pressed
without substantial justification. It makes little sense for the
IRS to complain that a taxpayer ran in circles trying to defend
against the IRS’s unjustified demands.
Rose’s affidavit also shows he expended 41.75 hours on
reviewing case law associated with Jackie’s case which was related
to the tax aspects of government securities and commodities
trading. Rose did this in order to predict the IRS’s potential
arguments. The IRS claims, incredibly, that Rose should have
called up the Commissioner in order to find out what arguments the
Commissioner was planning to advance.
Rose also expended 66 hours preparing a summary judgment
motion that ultimately could not be finished because of a conflict
between the application of tax law and securities law. In Rousseau
v. United States,23 a district court denied compensation for an
unfiled summary judgment motion. However in this case, unlike in
Rousseau, it was shown that Rose’s work on the summary judgment
motion was not wasted but was in fact necessary work as part of
general trial preparation, since the preparation of the summary
judgment motion organized the theories and evidence of the case
with respect to the applicable tax law. Thus, we cannot say that

22
See id. at 336.
23
Civ. A. No. 90-2333, 1991 WL 136992 (E.D. La. July 12, 1991).

9
the time was fruitless.
Rose also expended 8.75 hours on general trial preparation in
1993, which the government claims is impossible because “no dispute
existed in 1993 as to issues on which the Commissioner lacked
substantial justification.” However, although the Ragans were
informed that such disputes might be resolved as early as 1992, the
actual settlement of those disputes did not occur officially until
October 8, 1993, approximately two weeks before the scheduled
trial. Thus, it is hard to say that Rose should not have spent any
time preparing for a trial in 1993, when trial was not avoided
until two weeks prior.
Finally, Rose accounted for an additional 9 hours of
miscellaneous time related to Jackie’s case. Thus Rose’s
accounting shows that his requested time either applied to the
refund issue – which this court held was compensable – or to the
commodities and government securities trading issues on which
Jackie substantially prevailed. Moreover, the IRS never objected
to Rose’s time entries before. For these reasons, we find it
reasonable to credit all 140 of Rose’s claimed substantive hours.
Jackie requested, however, that Rose be compensated, in part,
at a rate of $250/hour, well above the statutory rate of $92/hour
that would otherwise apply to the fees at issue.24 The Tax Court
held that Rose had not shown any reason to receive a higher rate.
In general, a $75/hour base fee applies “unless the court
determines that an increase in the cost of living or a special
factor, such as the limited availability of qualified attorneys for

24
Not only is $250/hour well above the statutory cap, it is also in excess of
Rose’s typical $200/hour rate.

10
the proceedings involved, justifies a higher fee.”25
Rose had extensive background experience in the field of
securities and commodities law, having spent 27 years in and around
the securities industries both before and after law school. His
expertise is apparently possessed by fewer than 100 attorneys in
the country. According to Rose, only someone familiar with actual
industry practice would able to demonstrate the conflicts between
the IRS’s theories of securities law and the actual application of
the law in the real world.
Our circuit has made clear, however, that a mere legal
specialization is not a basis for an enhanced fee.26 As the
appellant noted in her brief, Rose “was brought into the case
primarily for his experience and background in securities and
commodities law.”27 Jackie also argues that Rose’s experience
included not only a lawyer’s knowledge of those legal areas, but
also a “familiarity with back office procedures and other business
and regulatory aspects of the financial community.”28
Based on our review of the record, however, we are not
persuaded that Rose’s special expertise went sufficiently beyond
specialized legal knowledge that the Tax Court’s denial was an
abuse of discretion. Admittedly, business and law are inextricably
combined, especially in the field of securities and commodities
regulations, and we do not hold that knowledge or expertise in
business may never be a basis for a special factor.

25
28 U.S.C. § 2412(d)(2)(A)(ii).

26
See Perales, 950 F.2d at 1078.
27
See Brief of Appellants, at 35 (emphasis added).
28
Id.

11
 Jackie also received a real benefit from Rose because he was
intimately familiar with David’s trading practices from his prior
work on the case. Such accumulated case knowledge may have created
a windfall for Jackie for which Rose would like to charge, but we
hold that it also does not support an enhanced fee award for Rose’s
time, despite the fact that no other attorney possessed that
accumulated knowledge.
In sum, we award Jackie $12,880 for Rose’s substantive work,
$6,811 for his fees for fees, and $75.65 for his expenses,29
totaling $19,766.65.

III

McEvoy & Co. claimed over $70,000 in fees not counting
expenses. The Tax Court allowed just over $10,000. The Tax Court
decided that many of McEvoy & Co.’s hours were expended on David’s
litigation and not Jackie’s. Jackie concedes that, but argues that
she should get half of McEvoy & Co.’s requested fees, regardless.
The Tax Court denied fees for a substantial amount of the time
that McEvoy & Co. expended on Jackie’s case.30 Chase McEvoy’s
billing entries were coded to the client for which the work was
performed. The Ragans’ billing entries were labeled as either
“David-Jackie,” “David,” “Estate of David,” or “Jackie.” For the
purposes of determining Jackie’s award, the Tax Court only credited

29
Initially, the Tax Court discounted these expenses because Rose did not
recover all of his claimed hours. Since our award credits all of Rose’s hours,
his expenses need not be discounted.
30
In its supplemental affidavit, McEvoy claimed the following fees: Chase
McEvoy, 515.9 hours at $120/hour; Thayer, 22.8 hours at $101/hour; Prestwood,
26.5 hours at $75/hour; Atchison, 186 hours at $30/hour; Trevett, 69.8 hours at
$20/hour; Dang, 7.5 hours at $20/hour. The Tax Court allowed $10,295: Chase
McEvoy, 50.75 hours; Thayer, 13.5 hours; Prestwood, 20 hours (all at $92/hour);
Atchison, 82 hours at $30/hour; Trevett, 4.2 hours at $20/hour; Dang, 0 hours.

12
the hours labeled as “Jackie” along with half of the hours labeled
“David-Jackie.”31
Jackie claims that much of McEvoy & Co.’s work was done on
behalf of both Jackie and David, despite references only to David.
However, McEvoy & Co. previously tried to recover the fees for all
of these disputed hours from David’s bankruptcy estate, although
McEvoy & Co. was unsuccessful. Jackie now wants to reclaim those
hours. The Tax Court decided, however, that McEvoy & Co.’s original
hourly bills to David’s bankruptcy estate affirmatively represented
that those hours were done on behalf of David only. Thus, such
representations estopped McEvoy & Co. from asserting otherwise to
the Tax Court.
We do not believe that such “double billing” by itself
necessarily would preclude Jackie from attempting to recover fees
charged by McEvoy & Co. For example, if McEvoy & Co.’s contract
with David and Jackie allowed McEvoy & Co. to recover payment from
either David or Jackie or both, such “double billing” would simply
have no relevance in determining whether those hours were performed
on behalf of David instead of Jackie. In other words, there are
two distinct issues: who was liable for the bill versus who
received the services. But even if McEvoy & Co. could recover all
of its fees from either Jackie or David, that does not mean that
all of the work was performed on both Jackie and David’s behalf.
According to McEvoy’s affidavit, his company’s billing codes
unfortunately do not correlate with whether the work was done
exclusively for the person listed. Nevertheless, it does not seem

31
The Tax Court also determined which billing codes signaled work done for David
versus Jackie with respect to McEvoy employees Thayer and Prestwood.

13
to be an abuse of discretion to require an accounting firm to code
its work accurately, and if it does not do so, to use such codes as
best estimates. To hold otherwise simply encourages sloppy billing
practices and facilitates the practice of claiming that work done
for one account was actually work done for another.
While we are sympathetic to the claim that such an accounting
underrepresents the amount of work performed on Jackie’s behalf, we
will not require the Tax Court to delve deeply behind the billing
codes in order to determine what work was done for whom. Thus, we
find that Jackie may only claim those hours coded to her and half
of those hours billed jointly to her and her husband, as determined
by the Tax Court.
In calculating the fee award for McEvoy & Co.’s work, the Tax
Court used a rate of $92/hour for several of the employees, which
was the prevailing statutory rate for attorney fees (as adjusted
for the cost of living). Although this created a windfall with
respect to those employees whose services were billed at a lower
rate, it is clearly erroneous, since $92/hour was the cap for
attorney fees, and these are not attorney fees.32 While $92 per
hour might be a reasonable rate, it is not a reasonable rate by
virtue of it being the attorney fee cap. Thus, we calculate McEvoy
& Co.’s fees based on each employee’s normal hourly rate, as there
has been no showing that those rates are unreasonable. Thus, the

32
The IRS claims that Jackie has waived this issue because the Tax Court used
$92/hour in its original calculation, and Jackie did not specifically contest
that rate in the first appeal. Cf., e.g., United States v. Parker, 101 F.3d 527,
528 (7th Cir. 1996). However, in her first appeal, Jackie successfully contested
the Tax Court’s refusal to consider McEvoy & Co.’s fees as litigation costs and
this court specifically remanded for those fees to be recalculated as litigation
costs. See Ragan I, 135 F.3d at 336-37. Thus, because Jackie prevailed on the
broad issue in her first appeal, we find that the narrower issue was within the
scope of remand and was not waived.

14
fee award for McEvoy & Co.’s substantive services totals
$11,396.50.33

McEvoy & Co. requested fees for preparing their fee request.34
All told, McEvoy & Co. claimed just over $10,000 in such fees.35
While these fees nearly equal the fees awarded for McEvoy & Co.’s
substantive work, we cannot say that they are unreasonable, given
the complexity of the case and the uncertainty surrounding what
portion of McEvoy & Co.’s time that the Tax Court would finally
credit. On the one hand, it was not an abuse of discretion for the
Tax Court to refuse to look behind McEvoy & Co.’s billing codes,
but on the other hand, we do not think it was unreasonable for
McEvoy & Co. to attempt to overcome their code deficiencies by
preparing an elaborate fee request. Thus, we award $10,302.50 in
fees for fees. In sum, we award $21,699 to Jackie for McEvoy &
Co.’s fees, not yet counting the expenses addressed below.
The Tax Court labeled some of McEvoy & Co.’s expenses as
overhead and therefore decided the expenses were not compensable.
McEvoy charged $8,817.79 for the computer storage of the Ragans’
financial records as well as $10,715.00 in rent, which included
physical storage of the Ragans’ documents, as well as office rent
for David Ragan and Bruce Rose, when they were in Houston working

33
The breakdown is as follows: McEvoy: 50.75 hours at $120/hour = $6,090;
Thayer: 12.5 hours at $101/hour = $1,262.50; Prestwood: 20 hours at $75/hour =
$1,500; Atchison: 82 hours at $30/hour = $2,460; Trevett: 4.2 hours at $20/hours
= $84.

34
The specifics of the request were as follows: Chase McEvoy: 46 hours at
$120/hour; Atchison: 58 hours at $65/hour; and Trevett: 22.5 hours at $45/hour.

35
See supra note 13.

15
on the case.
The Tax Court stated that these expenses were not reasonable
expenses for an expert. From the early 1980s through the early
1990s, computer memory was not nearly as cheap as it was a few
years later. Thus, charging for computer storage appears to have
been a reasonable charge given the numerous records that McEvoy &
Co. kept on their computers. Because computer memory is scalable,
it can be a direct, variable cost that is not overhead. In other
words, because memory can be purchased in increments, on an as-
needed basis, it is possible and reasonable to attribute memory
usage to a particular client. Thus, the computer memory is a
reasonable expense for an expert, since it was necessary for
McEvoy’s case preparations. Absent any other means for division,
we find that Jackie may recover half of the computer storage fee to
recover her portion of the expense, which equals $4,408.90.
The above analysis turns on the peculiar nature of computer
memory. The same cannot be said of physical office space, in which
McEvoy & Co. stored the Ragans’ actual documents. There was no
evidence that McEvoy & Co. purchases incremental storage space to
store clients’ files; thus, the rent charge for the documents
appears to be an attempt to recoup what is normally viewed as true
overhead, which is not compensable.36
Once McEvoy & Co. stored the Ragans’ documents, David Ragan
and Bruce Rose were required to work at that location on occasion,
since a temporary transfer of those files would have been difficult
and costly. McEvoy & Co. charged rent for David and Rose’s office
use. Again, however, there is no evidence that such a charge for

36
See Kuzma v. IRS, 821 F.2d 930, 933-34 (2d Cir. 1987).

16
office space was anything other than routine overhead as far as
McEvoy & Co. was concerned; consequently, it was not compensable.
Even if these charges were not considered to be overhead, they were
not expenses of McEvoy & Co. in its capacity as an expert, but
merely expenses in its capacity as a landlord, since the use of the
office space was for the convenience of David and Rose and not
McEvoy & Co. Either way, they are not reimbursable as litigation
expenses of McEvoy & Co.
The Tax Court denied Jackie’s request for expenses paid to
Management Advisory Services (MAS). MAS provided bookkeeping
services, but the Tax Court found the charge to be “unusual.” MAS
organized the Ragans’ documents which were kept at McEvoy & Co.’s
offices, which does not seem unusual, since MAS was able to perform
the service better and cheaper than McEvoy & Co. could have done
so. Since such organization was necessary for the preparation of
David and Jackie’s case, it is unreasonable to say that half of
that $3,920 expense should not be awarded to Jackie as an expense
of McEvoy & Co. Thus, we award $1,960 to Jackie for her portion of
this expense.
Another expense incurred in this case related to the copying
costs and other miscellaneous expenses associated with McEvoy’s
1996 Supplemental Affidavit. These costs totaled $1,192.04, which
we award to Jackie. Thus, the total award for McEvoy & Co.’s fees
and expenses thus far is $29,259.94.37
The Tax Court discounted the expenses of McEvoy & Co.’s
professionals by the same proportion that it discounted their

37
We also find that consideration of MAS’s fees was within the scope of remand
and this appeal because this court previously reversed the trial court’s entire
calculation of the fees associated with McEvoy & Co.

17
requested hours. In other words, if a given individual claimed 100

hours of work and $20 in expenses, and the Tax Court found 60
compensable hours, then the Tax Court discounted the claimed
expenses by 40% and awarded $12 in expenses.
The Tax Court cites no authority for discounting expenses
based on its discounting of requested hours and had Jackie’s
accountants related particular expenses to particular hours, then
it would not be reasonable to discount expenses associated with
hours that were fully compensated. Absent more explicit
accounting, however, we do not find that the Tax Court’s method was
an abuse of discretion. Thus, the Tax Court’s calculation of $400
in remaining miscellaneous expenses for McEvoy & Co. stands. Thus,
the total fee award with respect to McEvoy & Co. is $29,659.94.

V
Thus, Jackie’s total fee award in this case is $52,844.59,
consisting of the following components: $19,766.65 (Rose),
$29,659.94 (McEvoy & Co.), $1,089 (Thomas E. Redding),38 and $2,329
(James Mulder).39
AFFIRMED in part, REVERSED in part.

38
Jackie did not challenge the award for Redding’s services and therefore it
remains the same as determined by the Tax Court.
39
Jackie does not contest the award for Mulder’s services, except with regard
to his claimed expenses. We find no error with the Tax Court’s assessment of $75
in expenses for Mulder. Mulder claimed expenses of $100.36, but these were
properly reduced because he was unable to state with any degree of certainty
whether certain expenses were related to Jackie’s case.

18