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position maintained by a taxpayer is frivolous if it is “contrary
to established law and unsupported by a reasoned, colorable
argument for change in the law.” Coleman v. Commissioner, 791
F.2d 68, 71 (7th Cir. 1986). Sanctions are properly imposed when
the taxpayer knew or should have known that his claim or argument
was frivolous. Hansen v. Commissioner, supra at 1470; Nis Family
Trust v. Commissioner, supra at 544.
Petitioners knew or should have known that their position
was frivolous. Mr. Corcoran has been trained as an accountant
and has been employed in that capacity. He testified that he has
spent 4 years researching the tax laws. One month before trial,
respondent’s counsel sent a letter to petitioners clearly
outlining the relevant Code sections. He warned petitioners that
respondent would move for the Court to impose the section 6673(a)
penalty if they continued to pursue their frivolous arguments.
Petitioners ignored our precedents and the warnings from
respondent’s counsel. At trial petitioners introduced numerous
inappropriate exhibits, including a copy of a Peanuts Cartoon
featuring Snoopy. They have wasted limited judicial and
administrative resources. Accordingly, we shall require
petitioners to pay a $2,000 penalty to the United States under
section 6673(a).
To the extent not herein discussed, we have considered
petitioners’ other arguments and found them to be meritless.
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Last modified: May 25, 2011