In Re Merritt Yochum and Rose Marie Yochum, Debtors. United States of America v. Merritt Yochum and Rose Marie Yochum

Appellants Merritt Yochum and Rose Marie Yochum appeal from the district court’s order denying them attorneys’ fees and costs pursuant to 26 U.S.C.-§ 7430. The district court had jurisdiction under 28 U.S.C. § 157 (c)(1) and this- court has jurisdiction over the Yochums’-timely appeal pursuant to 28 U.S.C. § 1291 . We affirm.

I.

From 1977 to 1985, Merritt Kent Yochum and Rose Marie Yochum, a married couple, failed to file federal income tax returns. During the years in question, the Yochums operated two profit-seeking ventures: the first was a business called Carson Iron Works and the second was a fishing vessel christened the “Liberty.”

A. The Yochums’ Bankruptcy

In May 1987, the Yochums filed for Chapter 7 bankruptcy. Soon thereafter, the IRS filed proofs of claim that included the Yoc-hums’ unpaid income tax liabilities for the years 1977 to 1985. The bankruptcy court ordered the Yochums to file their ohtstand- ing tax returns; those returns were filed in August 1987.

On January 6, 1988, the Yochums filed an objection to the IRS’ proof of claim. Throughout most of that year, the government and the Yochums attempted to negotiate the actual amount of taxes due. For example,…