William M. Leggett - Page 8

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          The Court also concludes that petitioner does not fit within any            
          of the exceptions enumerated in section 6654(e).5  Therefore, the           
          Court sustains respondent’s determination of the addition to tax            
          pursuant to section 6654(a).                                                
          III. Section 6673 Penalty                                                   
               Section 6673(a)(1) authorizes the Tax Court to impose a                
          penalty not in excess of $25,000 on a taxpayer for proceedings              
          instituted primarily for delay or in which the taxpayer’s                   
          position is frivolous or groundless.  “A petition to the Tax                
          Court, or a tax return, 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).                                                            
               Respondent, on brief, has asked the Court to impose a                  
          penalty under section 6673(a)(1).  In petitioner’s 2005 trial,              
          petitioner was ordered to pay $5,000 to respondent for asserting            
          meritless and frivolous arguments.  Leggett v. Commissioner,                

               5Sec. 6654(e) provides two mechanical exceptions to the                
          addition to tax.  First, the addition is not applicable if the              
          tax shown on the taxpayer’s return for the year in question (or,            
          if no return is filed, the taxpayer’s tax for that year), reduced           
          for these purposes by any allowable credit for wage withholding,            
          is less than $1,000.  Sec. 6654(e)(1).  Second, the addition is             
          not applicable if the taxpayer’s tax for the full 12-month                  
          preceding taxable year was zero and the taxpayer was a citizen or           
          resident of the United States.  Sec. 6654(e)(2).  The Court has             
          concluded that petitioner is liable for a deficiency for 2002               
          that net of withholding exceeds $1,000.  Petitioner’s tax                   
          liability for 2001 was greater than zero.  See Leggett v.                   
          Commissioner, supra.                                                        





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