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requests, “forcing respondent to attempt to obtain the vast
majority of the documentary evidence in this case from third
parties”. Respondent asserts that petitioners were unreasonable
by calling witnesses at trial to testify in support of
petitioners’ proposed findings of fact that the C-group term
policy’s only benefit is current life insurance protection.
Respondent asserts that it was unreasonable for Mr. Smith to
defend against (1) respondent’s motion to compel documents from
AEGON USA, Mr. Smith’s client, and (2) respondent’s offer of
evidence as to certain marketing materials and other evidence.
Petitioners argue that their positions are meritorious.
Petitioners assert that respondent’s motion to impose sanctions
against each of them is frivolous and that the Court should
sanction respondent’s counsel under section 6673(b)(2).
We disagree with respondent’s assertion that we should order
each petitioner to pay a penalty to the Government under section
6673(a)(1)(B).40 Section 6673(a)(1)(B) provides this Court with
the discretion to award to the Government a penalty of up to
$25,000 when a taxpayer takes a frivolous or groundless position
in this Court. The penalty under section 6673(a)(1)(B) is
imposed against each taxpayer, see sec. 6673(a)(1), and a
taxpayer’s position is frivolous or groundless if it is contrary
40 We also decline petitioners’ invitation to sanction
respondent’s counsel.
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