Laura K. Davis, et al. - Page 20

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          II.  Section 6673(a)(1) Liability of Petitioners                            
               A.  Positions of the Parties                                           
               Respondent’s position is that we should impose a penalty               
          against Mr. Davis in docket Nos. 146-05L (concerning Mr. Davis’s            
          1997 and 1998 taxable years) and 147-05L (concerning his 1999               
          taxable year) for advancing frivolous arguments and making                  
          groundless claims and for instituting proceedings primarily for             
          delay.  Respondent points out that Mr. Davis’s 1997 and 1998                
          taxable years were previously before the Court in a deficiency              
          case in which we sustained the deficiencies in full and imposed a           
          penalty of $25,000 upon him under section 6673(a)(1) for                    
          instituting the case for purposes of delay and for making                   
          frivolous arguments.  Respondent argues that, despite the                   
          imposition of one section 6673(a)(1) penalty against him, Mr.               
          Davis has continued to institute proceedings in this Court for              
          delay and to advance frivolous and groundless arguments therein.            
          Respondent adds, however, that, at the Las Vegas trial session,             
          Mr. Davis testified to certain facts that, if true, might                   
          mitigate the penalty the Court saw fit to impose on him; e.g.,              
          his reliance on counsel.  Nevertheless, respondent believes that,           
          given his history of advancing frivolous or groundless arguments,           
          the Court should impose some penalty upon him.                              

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