Determine the after tax cost

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The IRS assessed a $32,800 income tax deficiency plus $4,015 interest against Mr. and Mrs. Reczyk because of an alleged understatement of investment income. They refused to pay and took their case to the U.S. Tax Court. The Reczyks incurred $7,829 attorney fees and other costs of the litigation. Determine their after-tax cost assuming that:

a. They won their case, and the IRS failed to demonstrate that its position was substantially justified.

b. They won their case, but the IRS convinced the court that its position was substantially justified.

c. They lost their case.

Reference no: EM13887456

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