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respective petitions to this Court, petitioners alleged that
respondent's determinations would be refuted by the facts they
would present at trial. Petitioners did not present any evidence
with respect to income or deductions. In fact, petitioners
conceded the adjustments at trial. While respondent alludes to
frivolous arguments made by petitioners, the record does not
reflect any frivolous or groundless arguments made by petitioners
prior to their representation by Mr. Ray. Nor is this Court
convinced that the petitions were filed primarily for delay.
Therefore, in the exercise of our discretion, we decline to
impose penalties pursuant to section 6673(a)(1) against
petitioners.
5(...continued)
primarily for delay,
(B) the taxpayer's position in such
proceeding is frivolous or groundless, or
(C) the taxpayer unreasonably failed to
pursue available administrative remedies,
the Tax Court, in its decision, may require the
taxpayer to pay to the United States a penalty not in
excess of $25,000.
(2) Counsel's liability for excessive 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 of such conduct, * * *
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