TAX COURT OPINION

Case: Robert Hunter & Barbara A. Gridley
Docket Number: 10588-83
Judge: Beghe
Opinion Type: memo
Filed: 04/29/2009
Pages: 48

T .C . Memo . 2009-8 9 UNITED STATES TAX COUR T ROBERT HUNTER AND BARBARA A . . GRIDLEY, ET AL .,' Petitioners v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket Nos .-10588-83 . 17646-83 , 27053 - 83, 10931-84 , 28723-84, 38757-84, 13477- 87, 19464=92, 621-94, 9532-94 . Filed April 29, 2009 . Robert Alan Jones and Declan J . O'Donnell , for petitioners in docket Nos . 10588-83, 17646-83, 27053-83, 10931-84, 28723-84, .38757-84, 13477-87, 621-94, and 9532-94 . Robert Alan Jones , for petitioners in docket No . 19464-92 . Henry E . O'Neill, for respondent . 'Cases of the following petitioners have been consolidated herewith for purposes of this opinion : Ronald L . and Mattie L . Alverson, docket No ._,17646-83 ; Russell L ., Sr . and Sally A . Fleer, docket Nos . 27053-83 and 13477-87 ; Robert H . and Barbara. A . Gridley, docket Nos . 10931-84 and .38757-84 ; Arden L . and Barbara G . Blaylock, docket No .- 28723-84 ; Willis F ., II and Marie D . McComas, docket No . 19464-92 ; .Wesley Armand and Sherry Lynn Cacia .Baughman, docket No . 621-94 ; and Norman A . Cerasoli an d .Estate of Irene Cerasoli, Deceased, Norman A ._Cerasoli, Executor, docket No . .9532-94 . SERVED Apr 29 2009 -2- CONTENT S Background I . " N Kersting Tax Litigation Before Dixon V Remand II . 'Dixon V Remand Proceedings . . . '-A .. Houston Status Conference . . . . . . . . . . . . . 7 . . . . . . . . . . . 7 . . 1 2 . . 12 B . Los Angeles Status Conference and the Thompsons ' Tax Records for Years Other Than 1979, 1980, an d 1981 . . . . . . . . . . . . . . . . C . Motion for Limited Expedited Discovery an d Proposed Expert , Witness Testimony of Victori a Osborn . . . . . . . . . . D . Las Vegas Special Session ( Osborn Continued) E . Los Angeles Special Session and Motion for Summar y . . . 13 . . . . . 14 . . 16 Judgment of 100 - Percent Discount as Sanctio n (Osborn Concluded) . . . . . . . . . . . . . . 18 F . Washington, D .C ., Special Sessio n a nd Petitioners' Opening Brief . . . . . 2 0 G . Award of Appellate Fees and Our Determination o f the Scope of the Thompson Settlement . H . Dixon V Remand Fee and Expense Requests . . Discussion . . . . . . . . . . . . . . . . I . Application of Section 6673(a)(2)(B) . . . . . . . . . . . . . . . . 21 2 3 . . . . 27 . 27 II . Adjustments to Requested Fees and Expenses . . . . 2 9 A . Substantiation of Fees . B . Jones's Hourly Rate . . C . Respondent's Objections to Fees and Expenses , . Not Included in Current Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 . . 30 . . 31 D . Fees and Expenses Included in Petitioners ' Dixon III Appellate Fee Request . . . 32 E . Fees Incurred During the Appeal of Dixon III . 33 . . . 33 F . Fees Related to Closed Cases . G . Excessive Time on Opening Brief . . . 35 . . H . Client Relations . . 36 . . . I . Osborn Proposed Expert Witness Report . . . . 40 J ." Motion for Summary Judgment of 100-Percen t . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discount as Sanction . . . . K . Inadequately Described Entries L . Miscellaneous Objections and Adjustments . . . . Conclusion . . . ' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 . . 44 . . 4 5 . . 47 -3- MEMORANDUM OPINIO N BEGHE, Judge : This is the second opinion in our third set of opinions on petitioners ' requests for attorney .' s fees and expenses incurred in the Kersting tax shelter project litigation . after the discovery and disclosure of the misconduct of respondent ' s trial counsel in Dixon v . Co mmissioner , T .C . Memo . 1991 - 614 (Dixon II), vacated and ; remanded per curiam sub nom . DuFresne v . Co mmissioner , 26 F .3d 105 (9th Cir . 1994 ), on remand Dixon v . Commissioner , T .C . Memo . 1999 - 101 (Dixon III), revd . and remanded 316 F .3d 1041 (9th Cir . 2003) (Dixon V), on remand Dixon v . Co mmissioner , T .C . Memo . 2006 - 90 (Dixon VI), supplemented by Dixon v . Commissioner , T .C . Memo . 2006-190 (Dixon VIII), on appeal ( 9th Cir ., Dec . 28 , 2006 , and Jan . 3, 2007) . In our first attorney' s fees opinion, Dixon v . Commilssioner , T .C . Memo . 2000-116 ( Dixon IV ) ( supplementing Dixon III), we awarded Kersting project petitioners fees and expenses under section 6673 ( a)(2)(B)2 for representation services in this Court rendered by Attorneys Joe Alfred Izen (Izen), Robert Allen Jones (Jones), and Robert Patrick Sticht (Sticht) during the DuFresne remand . 2Unless otherwise-indicated, all section references are to the Internal Revenue Code , and all Rule references are to the Tax Court Rules of Practice and Procedure . -4- In the second set of attorney's fees opinions, Dixon v . Commissioner , T, .C . Memo . 2006-97 (Dixon . VII), and Young v . Commissioner , T .C . Memo . 2006-189, we responded to the ,supplemental mandate of the Court of Appeals for the Ninth . Circuit to rule on Kersting project petitioners' requests for appellate attorney's fees and expenses incurred in the Dixon V appellate proceedings . In Dixon VII we awarded appellate attorney's fees and expenses .under section 7430 to Kerstin g project petitioners represented in the Dixon V appeal by John R . Irvine (Irvine) and his partner, Henry G . Binder (Binder-), of Porter & Hedges and by Michael Louis Minns (Minns) . In Young we awarded appellate fees and expenses under section 7430 to Kersting project petitioners represented in the Dixon V appeal by Izen and Jones . The current set of opinions pertains to fees and expenses Kersting project petitioners incurred in this Court during the remand from Dixon V (Dixon V remand proceedings),3 which resulted in Dixon VI, supplemented by Dixon VIII, determining the terms o f 3Respondent and petitioners represented by Sticht entered into a comprehensive settlement agreement for fees and expenses incurred from 1992 through 2006, including the Dixon V remand proceedings . On Oct . 4, 2006, we ordered respondent to disburse $1,254,368 .11 to Sticht's clients in satisfaction of that agreement . -5- the Thompson settlement .4 Early in the Dixon V remand proceedings respondent agreed that Kersting project petitioners would'be entitled under section 6673(a)(2)(B) to attorney's fees and expenses incurred in the Dixon V remand proceedings . All attorneys who represented Kersting project petitioners in the Dixon V remand proceedings have applied for attorney's fees and expenses incurred in the Dixon V remand proceedings .' Thi s 'In the Dixon V remand proceedings, petitioners' dockets were consolidated for purposes of hearing, briefing, and opinion with 23 other docketed cases of Kersting project petitioners represented by Irvine, Izen, .Minns, and Sticht . 'The table below summarizes the legal fees and expenses (by individual attorneys and in total) Kersting project petitioners have requested with respect to petitioners' attorneys' services in the Dixon V remand proceedings : Attorney Fees Expenses Tota l Jones Minns Izen Irvine & Binder Total $265 ,717 .45 967 , 362 .21 748 , 674 .14 1, 101,575 . 34 3 , 083,329 . 14 $15, 965 .97 21 , 525 .99 38 , 248 .06 64 , 032 .76 139,772 .78 $281 , 683 .4 2 988,888 .2 0 786 , 922 .2 0 1 , 165,608 .1 0 3 , 223,101 .9 2 In addition, respondent agreed that non-test-case-petitioners represented by Sticht were entitled to recover fees and expenses totaling $317,708 .03 for services Sticht rendered in the Dixon V remand proceedings as part of the total award for Sticht's services . See supra note 3 . Declan O'Donnell,(O'Donnell) has not filed a request for an award of attorney's fees . However, Jones and O'Donnell provided joint representation to Robert H . and Barbara A . Gridley (the Gridleys), Russell L ., Sr . and Sally A . Fleer (the Fleers), and Arden L . and Barbara (cid:127)G . Blaylock (the Blaylocks) . We therefore assume that the motion Jones filed on July 10, 2007, is the Gridleys', Fleers', and Blaylocks' sole fee and expense request . -6- Memorandum Opinion covers fees and expenses petitioners incurred for Jones ' s services in the Dixon V remand proceedings . Our most recent Opinion , Dixon v . Co mm issioner , 132 T .C . ( 2009 ) ( Dixon IX), dealt with fees and expenses incurred for services provided by Irvine, Binder, and otherPo,rter & Hedges attorneys .. A subsequent opinion or opinions will deal . with the pending fee requests of Kersting project petitioners represented by Minns and Izen in the Dixon V remand proceedings . In the tables below we summarize the fees and expenses petitioners have requested herein, respondent ' s objections, fees and expenses we will allow over respondent ' s objections, and the amounts we hbld'petitioners-are entitled to recover for Jones's services and expenses in''the Dixon,V remand proceedings . Fee Awar d Fees petitioners request $265 ,717 .45 Fees to which responden t objects $116,873 .75 Fees allowed despit e respondent ' s objections 49,806 .2 5 Fees disallowed 67 ;067 .50 .Fee award 198,649 .9 5 Expense Awar d Expenses petitioners request Expenses to which responden t objects -$13,178 .22 $15,965 .9 7 Expenses allowed despit e respondent.'s objections Expenses disallowe d Expense award '3,229 .52 9,948 .7 0 6,017 .27 Background The underlying facts in these cases are fully described i n Dixon II, Dixon III , Dixon IV, Dixon VI, Dixon VII , Young v . Commissioner , supra, Dixon VIII , and Dixon IX . The parties have provided additional pertinent facts in petitioners' fee request and respondent ' s objections thereto . The parties have no t requested an evidentiary hearing, and we have found a hearing unnecessary . Cf . Rule 232(a)(2) . I . Kersting Tax Litigation Before Dixon V Remand Petitioners are non-test -case petitioners in the Kersting tax shelter litigation . The Kersting tax shelter litigation arose . from respondent ' s disallowance of interest deductions claimed by participants in tax shelter programs promoted by Henry F .K . Kersting during the late 1970s and the 1980s . Respondent's determinations of deficiencies against Kersting tax shelter . participants eventually resulted in the docketing of approximately 1,800 cases in the Tax Court . Most Kersting project petitioners entered into piggyback agreements with respondent in which they agreed that their cases would be resolved in accordance with the outcome of a small number of test =cases . In Dixon II the Court upheld the deficiencies resulting from Kersting tax shelter deductions claimed by,petitioners in the to-st cases . On June 9, 1992, shortly after the entry of the -8- Court's decisions in Dixon II, .respondent's management discovered that before" trial respondent's , trial . attorney, Kenneth W . McWade (McWade), and his supervisor, Honolulu District Counsel William A . Sims (Sims), had entered into secret settlement agreements with test case petitioners John .R .-and Maydee Thompson (the Thompsons) and John R . and E . Maria Cravens (the Cravenses) . Sims and McWade had not disclosed the Thompson and Cravens settlements to their superiors, the Court, or the other test case petitioners or their counsel . . The primary purpose and final effect of the Thompson settlement was to provide the Thompsons refunds more than'sufficient to pay the fees-of Luis C . DeCastro (DeCastro), the Thompsons' attorney, to represent them in the test case trial . Respondent moved for the Court to conduct an evidentiary hearing to determine whether the undisclosed settlement agreements had affected the .Tax Court's decision in Dixon II . The Court denied respondent's motion for .an evidentiary=hearing, entered decisions giving effect to the Thompson and Cravens settlements, and allowed to stand the decisions sustaining respondent's adverse determinations against the other test case petitioners . We also denied motions to intervene in the Thompson and Cravens cases filed by Izen and Sticht on behalf of certain test case and non-test-case petitioners, . -9- The test case petitioners (other than the Thompsons and th e Cravenses) and the non-test-case petitioners . seeking to intervene appealed to the Court of Appeals for the Ninth Circuit . The Court of Appeals vacated our decisions in the test cases,-holding that an evidentiary hearing .was necessary to determine whether the misconduct of respondent's counsel had given rise to "a structural defect voiding the judgment [in Dixon II] as fundamentally unfair, or whether, despite the government's .misconduct, the judgment can be upheld as harmless error ." DuFresne v .' Commissioner , 26 F .3d at 107 . The-Court of Appeals directed the Tax Court to hold such a hearing and to consider the merits of all motions of intervention filed by affected parties . In an unpublished opinion, Adair v . Commissioner, 26 F .3d 129 (9th Cir . 1994), the DuFresne panel (Goodwin, Ferguson, and Trott, JJ .) also affirmed our denials of the motions to intervene in the Thompson and Cravens cases on the ground that thos e decisions had become final . E . To give effect-to the direction of the Court of Appeals in DuFresne to consider- the merits of-all motions to intervene by affected parties, we further ordered the consolidation of 10 non- test-cases with the remaining test cases . Petitioners were among the non-test-case petitioners whose cases were so consolidated . During the course of . the evidentiary hearing, Izen sought discovery of documents listed in respondent's privilege log that -10- pertained to respondent's conduct .fol'lowing the trial of the test cases . Izen alleged that, among other things, respondent's activities . after May 1992 amounted to an . effort to conceal the fraudulent conduct .of the Government attorneys in .the test cases . We . denied Izen's discovery-requests, sustaining various privileges asserted by respondent . See Dixon'III, Procedural History of the Evidentiary . Hearing III . Developments Following Initial Evidentiary Hearing , C . . Denial of Mr . Izen's Motion To Compel Production of Documents . After the evidentiary hearing we issued our opinion in Dixon . III . . In that opinion we'all .owed the Court's decisions in Dixon II'to stand, .holding that ,the misconduct of the Government attorneys did not create a .structural,defect that prejudiced th e Court's decision in Dixon'II but amounted to harmless error . imposed sanctions against respondent by relieving petitioners of liability for (1) the interest component of the addition to tax for negligence under former section 66 .53 :(a), and (2) th e incremental interest attributable to the increased rate prescribed .in former section 6621(c) . On .April 1, 1999, the next day after our issuance of-the Dixon III opinion, we referred the misconduct of Sims, McWade,,and DeCastro to the Tax, .Court's Committee on-Admissions, Ethics, and Discipline .. In Dixon I-V we imposed ., additional sanctions . pursuant to section 6673(a)(2)(B) by ordering respondent to pay attorney's -1.1- fees of Kersting project petitioners to investigate and present the evidence of Sims's and McWade's misconduct to the Court . The test case petitioners again appealed to the Court of Appeals for the Ninth Circuit . We also certified the cases of non-test-case petitioners represented by Izen, Sticht ; Jones, and Declan J . O'Donnell (O'Donnell) for interlocutory appeal . After various procedural delays described in Young v . Commissioner , T .C . Memo . 2006-189, the Court of Appeals accepted the interlocutory appeals of the non-test-cases but held them i n abeyance pending resolution of the appeals of the test cases . In the meantime, Minns replaced Izen as appellate attorney for the Dixons, DuFresnes, and Hongsermeiers . Later, Irvine_land Binder replaced Minns as appellate attorneys for the . Dixons and DuFresnes . Minns remained appellate attorney for the Hongsermeiers, and Izen remained appellate attorney for the Youngs and the Owenses . On January 17, 2003, a different panel of . the Court of Appeals (D .W . Nelson, Hawkins, and Wardlaw, JJ .) issued Dixon V (amended March 18, 2003), reversing Dixon ,III and remanding the test cases . The Court of Appeals held that the misconduct of the Government attorneys was a fraud on the Court, for which no showing of prejudice was required . Dixon V, at 1046 . The Cour t .of Appeals . directed that we extend terms equivalent to,those of the Thompson agreement to "Appellants and all other taxpayers -12- properly before this Court" . Id , at 1047 . The Court of Appeals left to the Tax Court's discretion "the fashioning of such judgments which, to the extent possible and practicable, should put these taxpayers in the . same 'position as provided for in the Thompson settlement ."_ Id . n .ll . The Court of Appeals took no action on the denial of Izen's discovery requests . On March 14, 2003, another panel of the Court of Appeals (Canby, O'Scannlain, and T .G . Nelson, JJ .) remanded the non-test- cases that had been appealed and held in abeyance, directing further proceedings consistent with Dixon V . On April 23, 2003, the Tax Court received the primary mandate of the Court of Appeals .(the primary mandate) vacating Dixon III . On June 2, 2003, the Court received the supplemental mandate of the Dixon V panel, directing-us to consider petitioners' appellate fee requests . II . Dixon V Remand Proceeding s A ., Houston Status Conferenc e July 7 , 2003, , after-°reviewing an April 30 motion b y respondent and petitioners' status reports, we scheduled a status conference, to be held in Houston on August 18, 2003 . On July 11, 2003, we ordered the parties to file reports of their suggestions for the agenda of that status conference . By August 12, .2003, counsel for the petitioners whose cases had been consolidated for the Dixon-V remand .,proceedings, as well as -13- counsel for other Kersting project petitioners, filed such reports . In his report O'Donnell asserted that Kersting project petitioners whose cases had been-closed by stipulated decisions (the closed cases) should also be entitled to the benefit of the Thompson settlement .'-' B . Los Angeles Status Conference and ;the Thompsons' Tax Records for Years Other Than 1979, 1980-and 198 1 After the Houston status conference it became obvious that the parties'were in substantial disagreement about the terms of the Thompson settlement . Specifically, petitioners contended that the Thompsons derived tax benefits from the Thompson settlement that went beyond the stated terms of the settlement and decision documents . Petitioners also asserted that the benefit extended to taxable years of the Thompsons-other than 1979, 1980, and 1981, the taxable years at issue in-the Thompson test cases . 6Several Kersting project petitioners whose cases had been closed by stipulated decisions subsequently filed or attempted t o .file motions to vacate decisions . In Hartman v . Commissioner , T .C . Memo .,2008-124, reconsidering and superseding Lewis v . Commissioner , T .C . Memo . 2005-205, we held that the Thompson settlement sanction will be imposed against respondent in the docketed cases of all Kersting'project petitioners in which stipulated decisions were entered on or after June 10, 1985, the commencement date of the Court's Honolulu trial session at which the Court and representatives of the parties agreed to use the test case procedure . Our Hartman opinion is the subject of motions for reconsideration by respondent and some petitioners, which raise primarily . issues of implementation . -14- Because the parties _ could . not agree on the terms of th e Thompson settlement, further evidentiary proceedings were require .d to determine those terms and provisions . The Court scheduled a status conference in Los Angeles , which was held on September 5, 2003 . At this conference Jones complained that respondent had failed to provide transcripts of the Thompsons' tax records . Jones argued that these records were needed to determine whether the terms of the Thompson'settlement extended to years other than 1979, 1980, and 1981 . C . Motion for Limited Expedited Discovery and Proposed Expert Witness Testimony of Victoria Osbor n -On .;September 8, 2003,, Jones filed a motion for limited expedited discovery . Jones attached to this motion the declaration of Victoria Osborn (Osborn), in anticipation of seeking to qualify her as , an expert witness . In her declaration, Osborn asserted that the Internal Revenue Service ( IRS) could retrieve Return View (RTVUE) records, which would contain information sufficient to satisfy Jones's request for the Thompsons ' tax records . Osborn asserted that RTVUE would provide line -by-line records of the Thompsons' tax returns , whereas the Individual Master Files ( IMFs) respondent had given petitioner s provided only general information . In an~order dated September 17, 2003,'we granted Jones's motion for limited expedited discovery . -15- On September 29, 2003, respondent's counsel, Henry E . O'Neill (O'Neill), sent Jones'aletter .stating that respondent could provide petitioners only with IMF transcripts and not RTVUE transcripts . Respondent's letter explained that RTVUE transcripts had never existed for years before .1990 . Respondent further explained that RTVUE files are automatically deleted after 3 years and that therefore the Thompson RTVUE records were' not available for 1990 through 1994 . On October 2, 2003, the Court held a telephone conference in which counsel for the parties and the Court discussed Izen's request for documents listed in respondent's privilege log . Izen asserted that those documents were no longer subject to privilege -and would provide information about the Thompsons' tax records for the years 1978 through 1993 . In an order dated October 10, 2003, the Court informed Izen that those documents were-not in the Court's possession and that Izen should request them from respondent by motion . " During that conference Jones stated that'-he would contact- respondent informally with suggestions for possible alternative sources for RTVUE transcripts . On October 31, 2003, Jones sent respondent a fax reciting respondent'-s general procedure for requesting RTVUE transcripts . Jones did not provide or suggest alternative sources'for RTVUE transcripts . On November 3, 2003, respondent filed a status report, including a copy of Jones's -16- fax . On November 10, 2003, Jones filed his status report, again requesting that respondent provide him with the Thompsons' tax returns for the years 1989 through 1993 . Jones. also requested that the Court release certain documents under seal,,which had been provided by the Thompsons' estate planning counsel, pertaining to the Thompsons' 1989 through 1993 tax records . On November 24, 2003, respondent filed a supplement to the November 3, 2003, status report . In that report, respondent had continued-to assert that,RTVUE transcripts were no longer available for any of the years 1990 through 1994 and that they never existed for the years 1978 through 1989 . The supplemen t contained the declaration of Shirley Smart (Smart), a litigation coordinator at the Fresno service center, that RTVUE transcripts were no-longer available for any of the years 1990 through 1994 and that RTVUE records never existed for years before 1990 . On December 19, 2003, the Court issued an order for production of all items described in the privilege log, except item No . 12 .3 . The privilege log documents included the Thompsons' tax returns for 1989, 1991, and 1992 . D . Las Vegas Special Session (Osborn Continued ) On April 13, 2004, the Court issued a scheduling order, setting the first session of the evidentiary hearing for . September 20, 2004, in Las Vegas, Nevada, and setting forth the agenda for the hearing . The order stated that the hearing was to -17- be held for the sole purpose of determining the terms-of the Thompsonf"settlement .- It further stated that neither appellate fees nor'the closed cases would be addressed - during the evidentiary hearing . On August 27 ; 2004-.,, Jones filed petitioners' motion for'leave to submit out of .time notice of expert witness and a notice of expert-witness to which Osborn's proposed '*expert witness summary r eport'was attached . .Despite the late entry"into the Kersting project proceedings of the Porter & Hedges attorneys,' counsel for theDixon .V taxpayers informally agreed that'Porter & Hedges, Binder in particular, would essentially serve as lead counsel in the Dixon V remand proceedings. On September 9 ;-2004, Binder-,filed petitioners' motion to allocate the burden . of proof, .-to respondent on specified issues in determining-of'-the terms of the Thompson settlement : On September ' 10, '2004 ; O'Neill informed petitioners. that, .on September 7, 2.004 ,'he had discovered-the Thompsons' . tax records and returns for the years 1983-through 1989 . -On September 20,through 22, 2004, the Court held the firs t scheduled hearing session in Las Vegas .. During this ' session, on September 20, 2004, the parties submitted a Joint stipulation of facts ;that' included among its accompanying,exhibits the tax records O'Neill" had'rediscovered on September . 7,, 2004 . -'18 - Respondent also filed a motion,-in-limine to exclude Osborn's proposed expertwitness testimony . Because .Osborn's~,report was ,little more than an outline,, the Court postponed ruling- .on, respondent'-s motion to give Osborn the opportunity to prepare . a. more ., detailed report .' . On October 4, 2004, Jones . submitted the "Superseding Expert .Witness Report of Expert Witness :Victoria Osborn ." On'October 7, 2004, the Court issued .an order,-denying respondent :stmotion in limine .to excludeaOsborn's testimony, without prejudice to ;renewif her=°superseding report should fail to meet the requirements .of rule 702 of .the- Federal- Rules .of . Evidence . " Los--Angeles Special Session and Motion fore Summary Judgment of 100-Percent Discount as Sanction (Osbor n Concluded, ) -, ;Many factual issues remained ' unresolved < a.fter the Las _, Vegas session . On October 6, 2004 , the Court issued a scheduling order ,continuing-°rthe . hearing . to .,November 22',, 2004 , in Los Angeles . On Nbvember' . 4, 2004 ,-% respondent _ filed a . . renewed motion , in . limine to exclude Osborn ' s testimony and :her,supersedingreport . O n November 5,'2004, : the-Court ordered - Jones to respond to that motion-by November- .15, 2 .004 ,1 and Jones 'filed , a timely response . On'November 16,,2004 , the Court granted respondent ' s motion .,in limine because' Osborn ' s:report consisted . primarily of legal ; , . conclusio ns, .which= are not , the proper , subject of expert testimony . See Rule 143 ( f)(1) ; Fed . R . Evid . 702 and 703 . Even -19- though the report was not admissible as expert testimony, the Court admitted the report into evidence "for the sole purpose of ruling on respondent's [renewed] motion in .limine" . On November 22, 2004, Jones filed a motion to strike and for sanctions, claiming Osborn had been'defamed by materials include d in respondent's renewed motion' in limine . On December 10, 2004, the Court denied Jones's motion t strike and for sanctions . The Court's order made clear that the Court had not considered the materials Jones had complained about in ruling on respondent's motion in limine . Moreover, th e Court's order also "forewarned" Jones that the Court would : not be inclined to look with favor on the inclusion in his fee 'application for post-mandate work in these cases of the time spent and expenses incurred in the preparation of the motion to strike and for sanctions . The Court and counsel have been heavily burdened with attempting to resolve the multiple aspects of this difficult, protracted, and unique litigation . It should have been clear to Mr . Jones more than a yea r .ago that Ms . Osborn had nothing useful to offer in terms of producing relevant evidence to the Court . On January 31, 2005, Jones and O'Donnell filed a motion for summary judgment on behalf of petitioners Gridley and Fleer . The motion contended that the Court should respond to the Dixon V primary mandate by granting the Kersting project petitioners a 100-percent discount from the deficiencies as a sanction .' On 'In-claiming that Kersting .project petitioners should be entitled to have the Kersting deficiencies eliminated, Jones and O'Donnell ignored the decision of the Court of Appeals in Dixon V . .) (continued . -20- February 24, 2005, respondent filed an objection to petitioners' motion for summary judgment .of .a 100-percent discount as a sanction . Citing Rule :121(b), . respondent asserted that petitioners, were not entitled to summary judgment . because there were material facts in dispute . Agreeing .with respondent, we denied the motion for summary judgment for failure to .satisfy the requirements of :Rule, l21 (b ) On March 29, 2005, O'Donnell and Jones filed their "Pre- trial Memorandum of Petitioners Gridley~,& Fleer " . In tha t pretrial memorandum O'Donnell , and Jones again requested that we reconsider our denial of petitioners' motion for summary .. judgment of a 100 .-percent discount . We retitled the memorandum as ."Pre- trial Memorandum,of Petitioners . Gridley & Fleer'and Motion for tr Reconsideration of Order Denying Motion-for Summary : Judgment" . In an order dated March 29,'2005, we denied O'Donnell and Jones' s motion for reconsideration of our denial of their motion fo r summary judgment . F . Washington, D .C ., Special Session and Petitioners' Opening Brie f On ;February 3, 2005, petitioners filed a motion for a third and final evidentiary hearing session . ; On FebruaryA :, 200 .5, w e 7( . . . continued ) that "we will not enter judgment eradicating all tax liability of these taxpayers . Such an extreme sanction, while within th e Court's power, is not warranted under these facts ." Dixon V, a t 1047 . -21- issued an order setting the final"hearing session for March 29, 2005, in Washington D .C . On February 23, 2005, Binder filed petitioners' supplemental motion to allocate the burden of proof, augmented by a memorandum of-points-and authorities . On March 29, 2005, in Washington, D .C ., we commenced the final 2-day session of the Dixon V evidentiary hearing . On the second day of the Washington,,'D .C ., se'ssion, .the Kersting projec t ,petitioners agreed to submit a joint opening brief, a task for, which the parties . acknowledged Binder would do most of the work . At that time Binder noted that the brief would take hundreds of hours and referred to an earlier comment by Izen that the opening brief would be a "Herculean effort Counsel for respondent and ,the Kersting project petitioners further informed the Court that they agreed that attorney's fees incurred during'the'Dixon V remand proceedings should be awarded under section 6673(a)(2) rather than section 7430 . . Award of Appellate Fees and Our Determination of th e Scope of the Thompson Settlemen t . G On May 13, 2005, we ordered the parties to file reports, by June 13, 2005, explaining their views on how we should award attorney's fees and expenses for the proceedings on remand and appellate attorney's fees in response to the supplemental mandate of the Court of Appeals . On July 13, 2005, respondent filed a response to our order of May 13, 2005 . On July 14, 2005, Binder filed a 189-page joint opening brief that was signed by all -22- petitioners' counsel .who-had participated in the Dixon .V reman d proceedings .- On July 15 ; 2005,,, Jones., O'Donnell, and Izen submitted a,21-page joint supplemental openingbrie f On July 15, 2005,,,Jones also submitted petitioners' report responding,to our . order'of MMay .y13, 2005 . Petitioners'. report was combined with the,,motionof appellant non-test- case petitioners for -award of attorney',s, fees and expenses . -In the-.motion, petitioners, requested . an award of fees incurred ..through ,June a 3 2005 . ,,,On May 2, 2006, we issued our opinion in_Dixon VI, explaining our determinati:on,,of :the terms of ;the Thompso n settlement ., OnMay 10, 2006, we-,,issued,,, our , opinion -in Dixon VII, awarding- fees and expenses-incurred during the : ,.appeal from-Dixon III to petitioners represented by Porter & Hedges attorney s Irvine,andBinder and by,.Minns On June 15, 2006, we ordered Jones to respond .to or rebut any .conclusions reached . in Dixon VII . On .July 19, 2006, -Jone s filed his third supplement to petitioners request for an awar d of appellate attorney's fees . On September 6, 2006, we issued our opinion in Young v . Commissioner , T .C . Memo . 2006-189, awarding petitioner s represented by Jones and Izen attorney' s fees and expenses incurred during the appeal from Dixon III . In Young we awarde d appellate fees and expenses for the period between May 2000 and -23- April 30, 2 .003, the date respondent had .'filed the motion for a status conference . We specifically excluded from the awards fees and expenses postdating'the appeal, beginning with fees and- expenses related to respondent's request for a status conference on April 30 ; 2003 . H . Dixon V Remand Fee andbExpense Request s On May .4, 2007, we ordered petitioners to submit request s for attorney's fees and expenses incurred in the Dixon V,remand proceedings by June 8, 2007 .- On May .29 2007, Jones filed petitioners' motion to extend the time to file'such a request . On May 30, 2007, we granted petitioners' motion'for .extension . On July 10, 2007, Jones filed petitioners' motion for-an award of attorney's fees '(herein referred to as petitioners ' current fee and expense request) . Pet'itioners' current fee an d expense request included fee's and expenses dating from May 1, 2003, through February 28, '2007 . Because the dates covered in petitioners'current fee and expense request went back to May 200.3, it included fees we had disallowed as premature, in Young Commissioner , supra . The invoices submitted covering-the , overlapping-periods were identical except for the-fees originally submitted on-invoice Nos . 4707, 4708, and 4709'in petitioners' appellate-fee request, which were submitted"on a different invoice, No . 4712, in petitioners' current fee and expense request . Other than the number of-the master invoice 'in"which -24- the fees are listed, there-is no .difference in th-e fees and .expenses submitted . July 27, 2007,, we ordered respondent-to submit a respons e .to"petitioners' current fee,and expense request by August 27, . 2007 . On August 23, 2007, respondent filed a response to petitioners' current fee .and expense request (herein . referred' to as'respondent's current response) . In the current response, respondent objected not onlywto the fees and expenses in petitioners',current requestF ;but also to fees and expense s petitioners had requested-in their . July 15, .2005, . appellate . fee request ., As part of'~<respondent's .incorporation of respondent's objections to the appellate fee request respondent, attache d copies_,of .portions of .,respondent's response _to petitioners' ,appellate fee and expense request Pages .13-19 and Exhibit,F of respondent's October_28, 2005, response and pages 15-16 and Exhibit- E of respondent's March 1,.,, 2006, response . ; , Respondent spent little effort to .clarify exactly which portions of the previous .responses--attached or not--were incorporated in respondents-,current response . ..In the current response, -respondent restated respondent's objections, from respondent's October 28, 2005, response to petitioners''-request for an award of appellate fees, to :, $18,627 .12 .in fees pertaining to,closed ;cases, $8,175 .62,in fees pertaining to matters unrelated to the Dixon V remand,. $29,389 .70 related to -25- 'Osborn, $9,'536 .16 in undocumented expenses, and the reasonableness of Jones's hourly rate, of $350 . However, Exhibit .F, which respondent attached, described only $3,949 .75 in fees and expenses related to the closed cases and $3,470 in fees and expenses unrelated to the proceedings on remand, and $1,946 .62 in fees and expenses related to'Osborn . The response included no explanation of which fees petitioners had failed to substantiate . Even though Exhibit E of respondent's March 1, 2006, response included more than $35,856 in fees,=respondent specifically objected only to $3,477 .50 of the fees from Exhibit E under'the heading "Spreadsheet (First Supplement) Questionable Entries Robert Allen Jones'Time and Fees"(cid:127)in respondent's current response . Respondent did not-specify whether respondent was renewing previous objections to the remaining $32,378' .50 in fees and expenses-included in-Exhibit E that were incurred before the remand period . In the current response respondent also objected for the first time to : $10,436 .07'in duplicate fees, $12,322 .38 in appellate fees, $12,349 .70 in fees pertaining to the closed cases, $11,497 .50 in excess'time spent . preparing opening brief, $33,946 .90 in' fees and expenses pertaining to client relations and computations," $10,222 .25 in fees and expenses that are, objectionable for a variety of reasons, and petitioners' not having paid or ,incurred the fees-and expenses for which . they had -26- applied . On October 4, 2007, petitioners filed- .a,reply to . respondent's current response . Petitioners stated that th e appellate fees respondent objected to were not par t petitioners' current fee request . . Petitioners also pointed ou t that Exhibit E from respondent's March 1 , 2006 , , response t petitioners',appellate,fee request, contained numerous entries dated,before the remand,period and that Jones had not included .these entries in petitioners' current fee and expense request . In,their reply to . respondent's response, petitioners also conceded that they should not receive an award for entries related to-the closed cases that they had included in,their current'request .- After . conceding this point, however , petitioners argued that some of,the entries respondent claimed ; were related to the closed cases were attributable to other matters . Petitioners p .rovided .a list .of the entries they, contended respondent-claimed .were related .to the closed cases, an d the amounts of those entries petitioners agreed should b disallowed ., The,entries petitioners conceded were related .to the closed . cases amounted to $17 ,359 in , fees and $17 . 20 in expenses . However ., among the entries petitioners claimed ;, respondent objected - to as related to the closed .cases , petitioners erroneously included fees and expenses respondent had objected t o on other grounds .," I . Appli-cati(cid:127)on of Section 667 .3(a),(2) (B ) Discussion The: parties agree . that attorney's fees and expenses should be awarded, . under section -6673(a)(2)(B), with respect to .°all petitioners who participate .d .in the Dixon~V remand proceedings .9 Section 6673(a)(2)= provides : a - .(2)Counsel's liability foraexcessive costs .--} Whenever it appears to the Tax Court that any attorney or other person admitted to'practice"before . the Tax Court has multiplied the proceedings in any case unreasonably and vexatiously,-the. Tax"Court may require---- (A)' that such attorney or other person pay personally the :excess costs, expenses, and attorneys' fees reasonably incurred because o f .such conduct, ort ' (B) if such,.attorney 'is appearing on behalf : of the Commissioner of Internal Revenue, that the United States pay such excess-costs,, expenses, and' attorneys' fees in the same manner as such an award by ''a district . .court ,'The list=provided in petitioners' reply'to(cid:127) respondent's .response also contained numerous computational errors and inconsistencies . To avoid confusion, we have not elaborated on which of respondent's obj'ections correspond to'individual entries on petitioners'„ list ., ,However, we have disallowed, on ..the pertinent grounds, all those entries petitioners conceded are related to the closed cases .. .9We would expand the .-defined population entitled to .awards to include Kersting project petitioners whose interests were represented in the Dixon V remand proceedings and who paid or incurred the obligation to'pay fees and expenses of attorneys who provided services and have . filed motions for awards . -28- During the Kersting tax shelter litigation-this Cour t awarded attorney's fees and expenses under section 6673(a)(2)(B)' incurred in proceedings in this Court--Dixon IV--and under section 7430 for fees . and expenses incurred in the,Dixon V appellate proceedings--Dixon VII .and Young v . . Commissioner , T .C . Memo . 2006-189 . In Dixon .IV,-Dixon VII, and Young,-,we explained the . distinction between fee-shifting prevailing party statutes, such as section .7430,(cid:127)which are based on, substantive . policy that allows prevailing parties to-recover their fees as,compensation , and fee sanction statutes, such as(cid:127) section 6673 .(a) (2) , .which emphasize punishment and deterrence of party and attorney misconduct . See- Chambers v . NASCO, Inc . ., 501 U .S . 32, 52 (1991) ; Bus . Guides, Inc . v . Chromatic Commcns . Enters ., Inc . , 498 U .S . 533 (1991) ; Cooter & Gell v . Hartmarx Corp . , 496 U .S . 384, 409 (1990) . . Both section 6673(a)(2) and section 7430 limit the award of, fees to reasonable fees and . expenses . However, fee-shifting statutes, such as section 7430, impose additional-limitations , that do not apply under the sanction statutes, placing .an hourl y rate cap on fees, imposing a net worth limitation on taxpayers requesting reimbursement, and allowing awards to be made only i n favor of prevailing private parties . In Dixon IV we awarded fees and expenses -,under' 6673(a) (2) (B) because those fees were directly related to the misconduct of -29- respondent's attorneys leading to our opinion and decisions in Dixon III . In Young v . Commissioner , supra , and Dixon VII, we denied awards of fees under section6673(a)(2)(B), following the reasoning in Cooter & Gell v . Hartmarx Corp . , supra at 409, that the appeal of a decision to sanction aparty's conduct was not directly related to sanctionable conduct . Instead, we awarded fees and expenses under section 7430 because petitioners -substantially'prevailed on appeal . In the Dixon V remand proceedings, we determined the terms and scope of the Thompson settlement, which directly related to the misconduct of Sims and McWade and our failure ih Dixon III to "get it right We now award fees and expenses under section 6673(a)(2)(B) that are attributable to services Jones performed during the Dixon V remand proceedings . II . Adjustments to Requested Fees and Expense s We now turn to respondent's objections to fees and expenses in petitioners' current fee and expense request, as supplemented . Respondent first objects that the fees and expenses petitioners request were not reasonably incurred because Jones has failed t o -substantiate that the fees were, in fact, paid or incurred . Respondent also objects to the reasonableness of hourly rate s charged by Jones and his staff, fees and expenses petitioners di d not submit in their current fee and expense request , fees and expenses we declined to award in Young v . Commissioner , supra , -30- because they ,, ; were, related to the Dixon V remand proceedings, fees and expenses incurredin . .preparing the appellate fee request,, ,fees and expenses related to the .closed cases, the number,o f hours Jones's staff spent on . the opening, brief, . fees . and expenses attributable to client ;relations,< fees and expenses related to . proposed expert witness Osborn, .,fees and expenses related t Jones's, and O' Donnell' s motion for ,summary ;.judgment ,of, a 100-percent discount as sanction, inadequately described .fee an d expense,,entries, . and miscellaneous other items .{ } ~A . Substantiation of Fee s Respondent also objected, . in .respondent's response to . petitioners' current-,fee and expense . request, . that . petitioners . have-not substantiated the_,amountsbthey-paid between June 1 , 2005, and April 30, 2007 .,,In petitioners' , October 4, 2007, reply to respondent's response, Jones attached a list of the amount s .his clients had paid :-- .We therefore conclude that petitioners have . substantiated the amounts paid . -, . Jones's .. Hourly Rat e Respondent obj.ects<that,Jones's hourly rate of .$350-is unreasonable-and urges us to allow Jones the same rate as we .,did in . Young v . Commissioner ,- .supr-a , in which we awarded fees an d expenses under sectionr7430 . . Respondent is,arguing .in effect- that:-,the-,-capped rate under section 7430 applies to, section, 6673 (a) (2), . We disagree ., As.a fee-shifting prevailing party . -31- statute, section 7430 places a cap on the hourly rate for an award of attorney's fees . Section 6673(a)(2), however, is a fee sanctions statute and its provisions require only that the fees awarded be reasonable . Section 6673 does not impose a cap on hourly rates . See Harper v . Commissioner , 99 T .C . 533, 552 (1992) . Jones's rate is reasonable . During the Dixon V remand proceedings, Binder and Irvine billed at rates ranging from $310 to $425 before 2005 and $375 to $475 during and after 2005 . Sticht billed at $350 per hour for his services during the remand period . Respondent has agreed that Binder's, Irvine's, and Sticht's rates are reasonable . At $350 per hour, Jones's rate approximates or equals the rates charged by Binder and Sticht . Jones's rate is also less than the rate charged by Irvine . C . Respondent's Objections to Fees and Expenses Not Included in Current Reques t We next address' respondent's objections to fees and expenses petitioners did-not include in their current fee and expense request . In respondent's response to petitioners' request, respondent renewed the objections from respondent's October 28, 2005, and March 1, 2006, responses to petitioners' July 15, 2005, appellate fee request and its supplements . These renewed objections date back as far as 1999 . However, petitioners requested fees and expenses incurred only after April 30, 2003 , 1 week after our receipt of the Dixon V primary mandate . In -32- determining the award to petitioners in this opinion, :we have considered only those fees-,and expenses . petitioners' included . in their current fee and expense-request . We"therefore deny respondent's objections to fees and expenses not included i n petitioners' current request . D . Fees and Expenses Included in Petitioners' Dixon III Appellate Fee Reques t Petitioners' current fee and expense request includes entries of $9,832 .50 in fees and $333 .57 in expenses that petitioners also included in their appellate fee request . Respondent argues that we have already addressed these fees an d 11 expenses in Young v . Commissioner , T .C . Memo . 2006-189, and tha t petitioners cannot include them in their current fee request . We disagree ; we disallowed these fees and expenses in Young becaus e they were related to the Dixon V remand proceedings, makin g premature their inclusion in petitioners' appellate fee request . However;, petitioners' inclusion of those fees and expenses in their current .fee_and- .expense request is timely . We, make no downward adjustment to--,petitioners' award on the basis o f respondent's objection that, petitioners have . included, in their current fee . and expense request,fees and expenses we denied in Young . -33- E . Fees Incurred During the Appeal of Dixon III Respondent also objects that $12,270 of fees and $52 .38 o f expenses included in petitioners' current fee and expense request are related to the appeal of Dixon III and not related to the Dixon V remand'proceedings . Those fees are as follows : Jones Law clerk Total Hours 15 .70 67 .75 83 .45 Amount $5,49 5 6,77 5 12,27 0 In their'reply'to respondent's response,petitioners hav e stated that none of"the entries in their current fee request . relate to the Dixon V appellate proceedings . Despite this claim, however,--petitioners included fees and expenses-related to th e appellate fee request in their current fee - and . expense request . Petitioners' request for appellate fees was not related to the proceedings on remand .,- We awarded fees related to the appeal of Dixon III in . - Young' v . Commissioner , supra . . Petitioners' final opportunity to apply for appeal-related : fees has passed . Accordingly,-we disallow,$12,270 offees and $52 .38 of expenses related to the appealof .Dixon III . F . :Fees Related . to Closed . Case s Respondent, objects to $16, 557' .50' of, fees and $91 .20 of expenses related to the closed . cases . . The hours and fees . respondent . claims are, attributable'to :,wor.k on the closed cases are as follows : -34 - - H"ours Amount , Jones Paralegal Law clerk . Accountant Total , 39 .80 7 .29 4 .50 6 .55 58 .14 $13,930 .00 . 890 .0'0 537 .5 0 1,200 0 0 16,557 : .5 0 In . their October 4, 2007, reply to respondent 's response , petitioners conceded that efforts to vacate stipulated decision s in closed cases are separate matters, unrelated to ;athe terms o f the Thompson-settlement . However, petitioners argue that-some of the . entries, respondent claims are related-to the-closed cases are , :not ;so related .. They have provided a list, identifying 12 .7 . hours, amounting to . .$1,720~in fees, and $120 ..62 in expenses they claim respondent incorrectly attributed-to work,related .to the . closed cases . After reviewing the relevant entries,, we agree that-- respondent incorrectly attributed' . .5 hours of-attorney-,time-to work related to the closed cases . .,The entry,dated June-6, .2006 , claims .1 "hour of'' attorney time for "Conference- call, with ;; _ O'Donnell, Henry 0 Neill, IRS re : settlement stipulations,, attorney's fees remand ; Reopening partially settled cases," and cannot be completely attributable to work related_to--the closed cases . .We therefore allow 50 percent-of .that. entry ; .5 hours .of . Jones's =services, amounting to $1 .75 in fees .,; -35- We disallow the remaining 57 .64 hours'of fee entrie s respondent objects to as related to the closed cases .10 This results in reductions of petitioners' . fee and expense awards by $16,382 .50 and $91 .,20, respectively . G . Excessive Time on Opening Brie f Respondent argues that the time Jones's staff spent on the joint opening brief is excessive and urges us to disallow a, portion of the related fees . Respondent claims the number of hours Jones's paralegal . and law clerk. spent on 'the opening brie f is not "reasonable" within the . scope of section 6673(a)(2) .. . Respondent . objects to a total,of $11,4 .97 .5011 in fees related t o '°In the list of entries petitioners claim respondent .attributed to closed cases , petitioners mistakenly include d several entries to which respondent had objected for other reasons , such as work related to Osborn, to the summary judgment of a 100-percent discount as'sanction, inadequately described entries, and entries otherwise unrelated to the Dixon V remand proceedings . We did not include-these entries in our computation of entries related to the closed cases , but . in our computations of entries related to the,appropriate corresponding objections . However, we have not allowed any of the entries petitioners have conceded are noncompensable . "Respondent included $5,150 of fee entries in both respondent' .s'objections to-"duplicate" fees'and respondent's objections to excessive hours spent working on the opening brief . .We counted'the'$5,150 only once in calculating the $116,873 .75 of "Fees respondent objects to" in our fee award table, see supra p . 7, because both sets of objections were to the same fees . -36- the opening brief. . The fees-,corresponding tothis , objection are as follows : 12 - Paralegal Law clerk Total Hours . Amount . 71 .75 21 .70 93 .45 $9,327 .50 . 2,170 .0 0 -11,497 .5 0 Respondent does not object to an award(cid:127)'for any~of'the 26 .3 hours Jones spent on the brief . We disagree ' with'-"respondent Jones's .staff did riot ',expend . an'-excessive number of Yiours on the opening brief . The entrie s in Jone's'-s invoices make clear-that Jones and his staff were no t only4 writing the supplement to the 'opening brief Jones file d separately with Izen and O'Donnell but also helping Binder with the joint opening brief. In fact the billing statements Porter & Hedges submitted specifically refer to a "portion" of the opening brief on which Jones was working . Accordingly, we make no deductions for time Jones's staff spent on the opening brief . Respondent objects to time, respondent refers to as "client relations Respondent asserts . that $33,932 .50 in fees an d $2,903 .15, in expenses in petitioners' current fee request ar e 12Twenty-five . .lawF_clerk hours .and 21 .5 paralegal hours dedicated to the opening brief were included in respondent's objections to entries submitted in both petitioners' appellate and(cid:127),current fee requests . . There, is no indication that petitioners' have previously received any award for these hours . attributable to client relations and should be disallowed . Those fees are as follows : Jones Accountant Total Hours Amount 6 .20' 158 .81 165 .01 $2 , 170 .0 0 . 31,.762 .5 0 33 , 932 .5 0 We disagree with respondent . We may award fees for time spent on client relations if that time is sufficiently related t o the matter for which petitioners are entitled to a fee an d expense award . See Dixon VII . Moreover, where petitioners d o not provide the subject matter for client communications, we may determine the amount of those communications that is compensable . In this case, if the subject matter of client communications is unclear, we will allow petitioners an award'of 50 percent of the requested fee or expense . In Dixon VII we addressed the issue of client relations when we evaluated whether to award fees related to Binder's and Irvine's client conferences . Because we did not know the subjec t matter of these conferences, we assumed that 50 percent of th e time spent in the conferences related to the appeal (the matter for which we were awarding fees) and the remaining 50 percen t related to noncompensable unrelated matters (client relations and "hand holding") . We then awarded fees for the portion of th e time we allocated to appeal-related matters . 3.8 _ In Young v . Commissioner , T .C . Memo . 2006-189, we applied the same approach in evaluating fee and expense entries that di d not specify the subject matter of client communications . allocated 50 percent of those communications to the appeals , granting an award for that portion of the time, and 50 percent t o unrelated, noncompensable matters . In the case at hand, the majority of the fee entries respondent objects to as related to client relations are for th e calculation of petitioners' deficiencies and overpayments according to our decisions following Dixon VI and VIII . I These calculations were necessary to prepare the decisio n documents to be submitted to the Court for entry of decision . Because petitioners have appropriately documented the compensabl e subject matter of these client-related matters, we allow thes e .entries in their entirety . Most expenses that respondent objects to as client relation s are expenses for mailing copies of court filings to clients . We disagree-with respondent, finding that these expenses ar e attributable to compensable aspects of client relations . Among respondent's objections, however, are three clien t relations entries not attributable to the computation of client deficiencies and overpayments or mailing copies .of court filings to . clients . We apply thesame reasoning we applied in Young v . ' Commissioner , supra , and Dixon VII in determining the compensability of these three entries . -39- The first entry, dated August 9, 2006, is a "Letter to clients re : status ; description of appeal possibilities- ." Thi s entry consists of 1 .25 hours of Jones's services, amounting to $437 .50 in fees . It is clear that these communications were'not related to the matter on remand . We disallow the fees pertaining to this entry . The second entry is an expense labeled "Express to L . Wade ." Because the subject matter of the letter is unclear, we apply the approach of Young v . Commissioner , supra , and Dixon VII, an d disallow one-half of the fees pertaining to this entry, $7 .20 . The third entry, "Review and execute joint letter to clients with Declan", comprises .25 hours of Jones's services, amounting to $87 .50 in fees . In this case the contents of the communication are not clear, so we disallow 50 percent of the award requested, reducing petitioners' award,by $43 .75 . Therefore, we will deduct a total of $481 .25 in fees and $7 .20 in expenses from petitioners' requested award because those sums are related to noncompensable . client relations . The fees and expenses we have disallowed . under this heading are as follows : Fee s Jones Accountant Total'" Expenses - -40- Hours Amount 1-.38 -0-1 .38 $481 .2 5 -0 - 481 .2 5 $7 .2 0 I . Osborn Proposed Expert Witness Repor t Respondent objects to $25,921 .25 in fees and $9,783 .52 i n expenses related. to the services of proposed expert witnes s Osborn . The fees corresponding to this objection are as follows : Hours Amoun t Jones Paralegal Account manager Total 49 .55 36 .24 . 21 .00 106 .79 $17,342 .5 0 4,378 .7 5 4,200 .0 0 25,921 .25 ' We deny any award of attorney' s fees or expenses related t o Osborn and'her proposed expert witness report that were'incurre d after the filing of Smart's declaration on November 24, 2003 . our order of December 10, 2004, we stated that, after receiving Smart's declaration, Jones should have known that Osborn's testimony would not'be useful to the Court and thus that fees an d expenses related to Osborn's services that were incurred after that date were not reasonably incurred . 'All fees and expense s that respondent objects to as related to Osborn were incurred ' after November 24, 2003 . This is not the first time that a court has questioned the relevance and usefulness of Osborn's expert testimony . In Jones -41- v . United States ,- 81 Fed . Appx .' . 209 .'(9th Cir . 2003), them Court of Appeals affirmed'th e- District Court's unpublished ruling-in Jones v . United States , 89'AFTR 2d 2002-1816, 2002-1 USTC .par . 50 ; .380 .: (D . Nev . 2002), that an ..;affi-davit Osborn provided did not constitute newly discovered evidence, : that would have likely changed the'outcome .of the case . . The ..Court of Appeals similarly discounted Osborn's testimony in Parenti v . I .R .S . , 70 Fed . Appx . 470 (9th Cir . 2003), affg . Parenti v . I .R .S . , 91 AFTR 2d 2003- 1136, 2003-1 USTC par . 50,282 (W .D . Wash . 2003), holding that arguments based on Osborn's testimony claiming the assessment against Parenti was time barred and that the District Court ha d erred in excluding materials provided by O sborn Tacked merit . See Appellant's or Petitioner's Informal Brief at 5-6, 19-20 . MacElvain v . Commissioner , T .-C . Memo . 2000-320, the Tax Cour t rejected Osborn's testimony after determining Osborn had n o firsthand knowledge of the taxpayer's cases docketed in the Ta x Court . The Tax Court-'recently sanctioned Jones for attempting t o use Osborn's testimony( in'' Gillespie v . Commissioner , T .C . Memo . 2007-202, affd . on 'other issues 292 Fed . Appx . 517 ' (7th .Cir . 2008), and Davis'v . Commissioner , T .'C . Memo.. 2007-2-01, affd . 301 Fed .Appx : 398 (6th Cir ."200 .8), because her testimony addressed the "post-cycle, date" theory'previousl'yrejected in Dahmer v . United States , 90'AFTR 2d 2002-6804, 2002-68 .09, 2002'2 USTC par . -42- 50,,806, . at- 86,219, ;(W .D . Mo'2002) . We also sanctioned Jones in .these cases for making .frivolousarguments related,to Osborn's . proposed testimony . We,sustain in their entirety,respondent's objections to fees and"expenses attributable to Jones's efforts to include: the ;proposed expert witness report of Osborn . J .~ Motionfor Summary Judgment of 100-percent,Discount(cid:127)as - Sanction Respondent objects to including in the award fees incurred in :preparing and filing the motion for summary judgment of a 100- percent discount as a sanction and the motion to reconsider that motion, claiming that motion was "borderline frivolous" . Respondent objects to $2,600 in fees on these grounds, a s follows : Jones Paralegal Total. Hours Amoun t 7 .00 1 .50 8 .50 . ,$2,45 0 15 0 2,60 0 We agree with respondent and disallow fees incurred in the preparation, and filing-of the "Motion for Summary Judgment-of 100-percent Discount as Sanction" in their entirety . Rule 121(b ) governs the disposition of motions for summary,j,udgment filed,i n this Court . For the Court to grant a motion for summar y judgment, (a) the moving party_must,show the absence of dispute- as to any material fact and that .a decision may be rendered as a matter of law ; (b) the .factual materials and the inferences to be -43- drawn from them must be viewed in the light most favorable to the party opposing the motion ; (c)the-party opposing the .motion cannot rest on the mere allegations or denials, but'must set forth specific facts showing there .is a genuine issue for trial . Brotman v . Commissioner , 105 T .C .'1411 .142 (1995) (citing O'Neal v . Commissioner , 102 T .C . 666, 674 (1994)) : In our order-of March 2, 2005, we denied the motion fo r summary judgment of,a 100-percent discount as a sanction,' stating : "The motion for summary judgment does not appear to be a genuine attempt to resolve, even in part, the issues before the Court ." It should have been obvious to Jones and O'Donnell tha t there were numerous outstanding issues of fact . Moreover, o n March 29, 2005, even after we denied their first motion, Jones .and O'Donnell filed a second-motion in which they-asked the Cour t to reconsider their motion for summary judgment . We summaril y denied their March 29, 2005, motion the day they filed it . The primary mandate of the Court of Appeals in Dixon V required us to .determine the terms of the Thompson settlement . In Dixon V at 1047 the Court of Appeals stated : we will not enter judgment eradicating all tax liability of these taxpayers . Such an extreme sanction, while within the court's power, is not warranted under these facts . -Instead,--'we remand' to-the trial court with. directions to enter judgment, in favor of Appellants and all other taxpayers properly before this Court on terms equivalent to those provided in the 'settlement agreement with .Thompson and the .IRS . [Citation . and fn . ref . omitted .] -44- If we ..had awarded summary judgment of a 100-percent . discount as a sanction, we-would have completely disregarded the mandate of th e Court of Appeals . We deny,in its entirety petitioners' request ,for fees related .to,the motion for summary judgment of a 100- .percent discount as a .sanction . K . Inadequately Described Entrie s Respondent also claims that $4, .895 in fee entries i n petitioners'',current request are not detailed enough to determine ,whether those entries are related to the proceedings on_remand and, .thus, compensable . The hours and amounts attributable to those entries are as follows : Jones Law_Clerk Total Hours Amount 9 .75 10 .50 20 .25 $3,412 .5 0 1, 482 .5 0 4, 895 .0 0 The following amount to 9 .75 hours and $3,412 .50 i n attorney's fees : "Brief with ML for Dixon", "Discussion re- draft from Binder on sanctions with ML", "Call to O'Donnell", "Work on brief with ML ; conversation with Joe Izen," "Work with ML on sentencing, ." "Beghe order of 7/29 re : remittance to ML, " and "Soliation" . In their reply . petitioners did not explain who "ML" is an d why communications with "ML" would be necessary or the meaning o f "Soliation" . ., As (cid:127)a result,, we cannot determine whether thes e entries are related to the Dixon V remand proceedings . We therefore disallow the corresponding $3,412 .50 of attorney's ' _45- fees . Respondent alsb .identifies 10-.15 hours ofIlaw clerk services amounting to-$1,482 .50 in fees that petitioners have not adequately'described : ?'Reviewed recent pleadings", "Read recent pleadings", "Calls to Garrett, Gruen and Hinrich",~ and "Call from Attorney Binder"~.' Petitioners have not explained the subject or purpose of any of the above entries, any of#which could pertain to something other than determining the terms of the Thompson settlement . We'disallow $1,482 .50 of 'inadequately described,-law clerk fees . Petitioners' fee request is'reduced by a total of $4,895 for inadequately described-'work . L . ' Miscellaneous-Ob-e .ctions .and Adjustment s Respondent also objects,- ;on'various grounds, to including in the award $4 ;517 .50°n fees and $14' .20 .in expenses as follows : Jones Paralegal Total Hours' Amount "7 . 25 17 .70 24 .95 $21537 .5 0 1,980 .0 0 4 ,517 .5 0 The entries that respondent objects to under this heading include work related to appotential appeal, a motion to recuse the judge, and routine file maintenance . The first of thes e objections,concerns work related to a potential appeal, to whic h a total"of $2,137 .50 in tees is attributed : 4 .25 hours of c -46- Jones ' s time ,, amounting to $1,487 .50 in fees ,, and 6 . 5 hours,of, the paralegal ' s time , amounting to $650 in fees . r e agree with-. respondent . Work = related.,. to a potentia l appeal i s . not := related = to-the ;Dixon V remand proceedings . Therefore .: we-disallow :$2 .,137 . 50 in,fees for ,services relatedt o a .potential, appeal .,, . r. Respondents also objects -to an entry-related to .a ,motion"to recuse ; the . j udge, . ;' amounting , to 5 .2 hours,, of paralegal time and . $520 .in fees . We agree with respondent ., Petitioners never filed a motionto,recuse .- We will disallow an award of fees,~amounting to $520, related .,to ;this . subject- . Respondent objects t,o,fee .requests for routine file maintenance ; 6 hours and $810 in fees are attributable to .paralegal time .and .1 hour amounting to $350 in fees-is attributable to attorney=time . .; We agree with respondent . Routine office :=tasks are,. not sufficiently related to the proceedings on -remand. Therefore, we disallow fees for these entries and deduct an additional $1,160 in fees . Two other entries are not sufficiently related to proceedings on remand, : One for "Refund Claims" for 1 hour of work at Jones's rate of $350 per hour and another for""Powers o f Attorney" for 1 hour of attorney time, amounting to $350 . We will not award fees for either of these entries and disallow a n additional $700 from. petitioners' requested amount . -47- Respondent objects to $28 .80 in miscellaneous expenses ; "EXPRESS TO DECLAN O'DONNELL" and "Express to L . Wade" . deducted $14 .40 for the entry "Express to L . Wade" earlier in our "closed cases " section . . Accordingly ; we will not deduct that amount here again . However, .we. agree with respondent that the entry "EXPRESS TO DECLAN O'DONNELL" is an inadequate description . After considering respondent's miscellaneous objections, we reduce the requested award by a total of $4,517 .50 in fees and $14 .40 in expenses . Conclusion We disallow a total of $67,067 .50 in fees and $9,948 .70 in expenses from petitioners' requested award . Our downwar d adjustments are tabulated below : Summary of Disallowance s Objection Duplicative fees Dixon III appeal Closed cases Opening brief Client relations Osborn Summary judgment of a 100-percent discoun t Fees -0- $12,270 .00 16,382 .50 -0-481 .25 25,921 .25 2,600 .00 Expense s -0 - $52 .3 8 91 .2 0 -0 - 7 .2 0 9,783 .5 2 1 -0 - Inadequately described 4,895 .00 -0 - entrie s Miscellaneous Total 4,517 .50 67,067 .50 14 .4 0 9,948 .70 -48- After these amounts are deducted from the petitioners' fee and expense request, petitioners are entitled to an award of $198,649 .,95 in ;fees and $6,017 .27 in expenses . Giving effect to our concluding determination in Dixon IX, we .'shall invoke our inherent power to require respondent to pay to petitioners additional amounts equal to interest at the applicable rates for underpayments under sections 6601(a) and 6621(a)(2) on $198-,649 .95 and $6,017 .27 from July 10, 2007, the date Jones filed petitioners' motion for attorney's fees and expenses . We shall address the manner in which the award is to be paid and its allocation among Jones's clients in the order implementing the determinations in this opinion . To give effect to the foregoing , An appropriate order will b e entered .