- 28 -
upon professional advice in preparing the 1992 through 1995 Forms
1040. They have, however, failed to provide evidence that they
received advice on which they were entitled to rely. We assume
that they rely exclusively on our finding that there was no
deficiency in tax. Since we have found a deficiency in tax for
each year, we sustain respondent’s determination of a penalty
under section 6662(a) on the grounds of either negligence or
substantial understatement of income, modified only to take
account of the amount of each deficiency that we have determined.
B. Section 6673(a)(1)
1. Introduction
Respondent asks that we impose a penalty against petitioners
under section 6673(a)(1). That section provides:
SEC. 6673. SANCTIONS AND COSTS AWARDED BY COURTS.
(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
(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.
The purpose of section 6673 is to compel taxpayers to think
and to conform their conduct to settled principles before they
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011