- 34 -
On the basis of this record, we conclude that petitioner is
liable for accuracy-related penalties under section 6662(a). In
1991, he failed to report substantial amounts of income. In 1991
and 1992, he claimed deductions to which he was not entitled. He
failed to provide any reasonable explanation or any credible
evidence to substantiate his entitlement to the deductions. He
has not shown that there was reasonable cause for any portion of
the resulting underpayment, or that he acted in good faith.
Petitioner’s actions were not those of a reasonable and prudent
person under the circumstances. Accordingly, petitioner is
liable for accuracy-related penalties under section 6662(a) for
1991 and 1992.
VII. Penalty Under Section 6673
Respondent seeks imposition of a penalty under section 6673.
Section 6673(a)(1) allows this Court to award a penalty not in
excess of $25,000 when proceedings have been instituted or
maintained primarily for delay, or where the taxpayer’s position
is frivolous or groundless or if it is contrary to established
law and unsupported by a reasoned, colorable argument for a
change in the law. See Coleman v. Commissioner, 791 F.2d 68, 71
(7th Cir. 1986); Kish v. Commissioner, T.C. Memo. 1998-16;
Talmage v. Commissioner, T.C. Memo. 1996-114, affd. without
published opinion 101 F.3d 695 (4th Cir. 1996). In our opinion,
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