-18-
(the years immediately preceding the years at issue in the case
at bar). In Arnold I, petitioners failed to substantiate the
same or similar deductions/items. In Arnold I, on the basis of
facts substantially similar to those of the case at bar the Court
sustained respondent’s determination regarding the Western Timber
Farms, Inc., labor, and interest deductions; held that
petitioners were subject to self-employment tax on their return
preparation income and realtor income; and upheld the imposition
of accuracy-related penalties.
In the case at bar, petitioners made the same arguments
regarding the same or similar items that the Court rejected in
Arnold I. The Court issued the opinion in Arnold I before the
notice of trial was sent to petitioners in the case at bar and
the decision in Arnold I was final--petitioners did not appeal
the decision in Arnold I--before the opening briefs were due in
the case at bar. See sec. 7482(a); Fed. R. App. P. 13.
Accordingly, petitioners knew their arguments had been rejected
well before trial. Additionally, petitioners failed to provide
respondent with information requested until they were compelled
to do so by the Court, failed to substantiate items, and
repeatedly sought to delay the trial of the case at bar.
We, however, shall not impose a penalty pursuant to section
6673(a)(1). We take this opportunity to admonish petitioners
that the Court will strongly consider imposing such a penalty if
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