898 F.2d 455 (5th Cir. 1990), 89-4523, Sandvall v. C.I.R.

Docket Nº:89-4523, 89-4621
Citation:898 F.2d 455
Party Name:Dale K. and Donna L. SANDVALL, Petitioners-Appellants, v. COMMISSIONER INTERNAL REVENUE, Respondent-Appellee. Dale K. and Donna L. SANDVALL, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
Case Date:April 16, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 455

898 F.2d 455 (5th Cir. 1990)

Dale K. and Donna L. SANDVALL, Petitioners-Appellants,

v.

COMMISSIONER INTERNAL REVENUE, Respondent-Appellee.

Dale K. and Donna L. SANDVALL, Petitioners-Appellants,

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

Nos. 89-4523, 89-4621

United States Court of Appeals, Fifth Circuit

April 16, 1990

Page 456

Dr. Dale K. Sandvall, Arlington, Tex., pro se.

Donna L. Sandvall, Arlington, Tex., pro se.

Ms. D. Delgado, Atty., IRS, Dallas, TX, Peter K. Scott, Act. Chief Counsel, IRS, Washington D.C., Shirley D. Peterson, William

Page 457

Rose, Asst. Attys. Gen., Tax Div., U.S. Dept. of Justice, Gary R. Allen, Doris D. Coles, Kenneth L. Greene, Jordan L. Glickstein, Washington, D.C., for respondent-appellee.

Appeals from the Decision of the United States Tax Court.

Before POLITZ, GARWOOD, and JOLLY, Circuit Judges.

POLITZ, Circuit Judge:

Dale K. Sandvall and Donna L. Sandvall appeal adverse judgments of the United States Tax Court which assess deficiencies and penalties and award sanctions. For the reasons assigned we affirm the judgments of the Tax Court in these consolidated appeals and impose sanctions on the Sandvalls under Fed.R.App.P. 38 for taking totally frivolous appeals.

Background

These consolidated appeals involve the use of foreign based "trusts" in an attempt by the Sandvalls to avoid their lawful tax liabilities. On their 1981 and 1982 federal income tax returns they claimed certain deductions that generally accorded with the itemized income reported by Park Ridge Enterprises, a foreign entity controlled by the Sandvalls. After an audit of the returns of Park Ridge and the Sandvalls the Commissioner found inadequate substantiation and disallowed the deductions claimed. Alternatively, the Commissioner determined that Park Ridge was a sham or a grantor trust. The Commissioner imposed additions under 26 U.S.C. Secs. 6653(a) and 6661.

The Sandvalls petitioned the Tax Court for a redetermination, claiming that their returns were accurate and genuine. They refused, however, to cooperate in the stipulation process to define and delimit the issues, agreeing only to stipulate that their returns were genuine. They refused to exchange documents intended for use as exhibits at trial or to file a timely trial memorandum. They failed to produce any trust instruments relating to Park Ridge or to Oak Ridge Trust Organization, an organization to whom several checks were made payable, albeit subpoenaed, and despite an order expressly directing production. In response, the Sandvalls attested that in their "individual capacities" they did not have custody or control of the records of any trust. They offered no evidence whatever, other than their conclusionary statements.

The Tax Court upheld the Commissioner's assessment of deficiencies and additions and sua sponte imposed sanctions under 26 U.S.C. Sec. 6673 for the institution of a suit for the purposes of delay. The Sandvalls appealed.

After an audit of the Sandvalls' 1983 returns revealed the same scheme involving the transfer of taxable income to Park Ridge, the...

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