- 29 -
been instituted or maintained by the taxpayer primarily for
delay, or wherever the taxpayer's position in a proceeding is
frivolous or groundless.
We decline to impose a penalty under section 6673. Although
the Muhichs' position that the trusts had economic substance was
frivolous, we have rejected respondent's position the "consulting
fees" were dividends, holding instead the "fees" were
compensation. The Muhichs' position in this proceeding was
somewhat meritorious to the extent they were defending against
respondent's determination of constructive dividends. We
admonish the Muhichs that we shall not be inclined to exercise
our discretion under section 6673 so favorably in the future if
presented with similar arguments by them, and we may impose a
penalty.
In reaching all our holdings herein, we have considered each
argument made by the parties, and, to the extent not discussed
above, find those arguments to be irrelevant or without merit.
To reflect the foregoing,
An appropriate order will be
issued denying respondent’s motion
to impose a penalty under section
6673(a)(1), and decisions will be
entered under Rule 155.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011