- 14 -
transferred partnership interests and properties. The Wards were
required to show $204,543 and $209,127 of tax on their 1996 and
1997 returns, respectively; however, they reported $7,022 and $0
of tax for 1996 and 1997, respectively. Thus, the Wards’
understatements of $197,521 and $209,127 for 1996 and 1997,
respectively, exceed both 10 percent of the tax required to be
shown on their return--$20,454 for 1996 and $20,913 for 1997--and
$5,000. Therefore, on the basis of the evidence, we conclude
that the Wards had a substantial understatement of income tax.
They did not present any evidence indicating reasonable cause or
substantial authority. Id. Accordingly, on this issue, we
sustain respondent’s determination and shall grant respondent’s
motion for partial summary judgment.
III. Section 6673(a)(1)
Section 6673(a) authorizes this Court to penalize up to
$25,000 a taxpayer who institutes or maintains a proceeding
primarily for delay or pursues a position in this Court which is
frivolous or groundless. The Wards’ conduct in these cases has
convinced us that they maintained these proceedings primarily for
delay. Their actions have resulted in a waste of limited
judicial and administrative resources that could have been
devoted to resolving bona fide claims of other taxpayers. Cook
v. Spillman, 806 F.2d 948 (9th Cir. 1986). Their insistence on
making frivolous protester type arguments indicates an
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011