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circumstances, including the experience and knowledge of the
taxpayer and his or her reliance on a professional tax adviser.
Sec. 1.6664-4(b)(1), Income Tax Regs.
Petitioner argues that he is not liable for this penalty
because he did not understate his Federal income tax for 1992.
This is so, petitioner contends, because Ideal Management was not
a sham. We have already held that Ideal Management was a sham.
Nor do we find that petitioner had reasonable cause for his
understatement. We sustain respondent's determination on this
issue.
Turning to the final matter, respondent moved the Court at
the end of trial to impose a penalty under section 6673(a)(1).
Respondent asserts that petitioner's position is frivolous and
groundless, and that petitioner instituted this lawsuit primarily
for delay. In relevant part, section 6673(a)(1) provides:
SEC. 6673(a). Tax Court Proceedings.--
(1) Procedures instituted primarily for
delay, etc.--Whenever it appears to the Tax
Court that--
(A) proceedings before it
have been instituted or maintained
by the taxpayer primarily for
delay,
(B) the taxpayer's position
in such proceeding is frivolous or
groundless, or
* *** * * * * *
the Tax Court, in its decision, may require the
taxpayer to pay to the United States a penalty not in
excess of $25,000.
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