Dixon v. Commissioner, Docket No. 9382-83.
| Court | United States Tax Court |
| Writing for the Court | Beghe |
| Citation | 77 T.C.M. 1630 |
| Parties | Jerry and Patricia A. Dixon, et al.<SMALL><SUP>1</SUP></SMALL> v. Commissioner.<SMALL><SUP>*</SUP></SMALL> |
| Docket Number | Docket No. 22783-85.,Docket No. 17992-95.,Docket No. 17646-83.,Docket No. 20119-84.,Docket No. 9382-83.,Docket No. 621-94.,Docket No. 30979-85.,Docket No. 40159-84.,Docket No. 29643-86.,Docket No. 35608-86.,Docket No. 9532-94.,Docket No. 7323-84.,Docket No. 7205-94.,Docket No. 15907-84.,Docket No. 19464-92.,Docket No. 17993-95.,Docket No. 30010-85.,Docket No. 4201-84. |
| Decision Date | 30 March 1999 |
v.
Commissioner.*
[77 T.C.M. 1631]
Joe Alfred Izen, Jr., counsel for the petitioners in Docket Nos. 9382-83, 4201-84, 15907-84, 40159-84, 22783-85, 30010-85, 30979-85, 29643-86, and 35608-86. Robert Alan Jones, Las Vegas, Nevada, counsel for the petitioners in Docket Nos. 17646-83, 19464-92, 621-94, and 9532-94. Robert Patrick Sticht, Los Angeles, Calif., counsel for the petitioners in Docket Nos. 7323-84, 20119-84, 7205-94, 17992-95, and 17993-95. Mary Elizabeth Wynne, Steven A. Wilson, Andrew J. Gottlieb, Milton J. Carter, Jr., Robert E. Casey, and Richard S. Goldstein, for the respondent.
[CCH Pages]
Introduction .............................................................................. 1634
FINDINGS OF FACT .......................................................................... 1637
I. Kersting Tax Shelter Programs and Related Matters .................................. 1637
A. The Pike Case .................................................................. 1637
B. Kersting Criminal Investigation ................................................ 1637
C. Assessments of Kersting Promoter Penalties ..................................... 1638
D. Kersting Notice of Deficiency .................................................. 1638
II. Notices of Deficiency Issued to Kersting Program Participants ...................... 1638
A. Form of Notices of Deficiency .................................................. 1638
B. Thompson Notices of Deficiency ................................................. 1639
C. Cravens Notices of Deficiency .................................................. 1639
[77 T.C.M. 1632]
D. Alexander Notices of Deficiency ................................................ 1640
1. 1974 and 1975 .............................................................. 1640
2. 1976 and 1977 .............................................................. 1640
E. Validity of Notices of Deficiency .............................................. 1640
F. Errors in Notices of Deficiency ................................................. 1640
III. Commencement of Kersting Project ................................................... 1641
A. Tax Shelter Projects and Test Case procedures .................................. 1641
1. Overview ................................................................... 1641
2. National Office Tax Shelter Branch Functions ............................... 1641
B. Petitions for Redetermination .................................................. 1642
C. Brian J. Seery ................................................................. 1642
D. Respondent's Counsel ........................................................... 1642
1. Kenneth W. McWade .......................................................... 1642
2. William A. Sims ............................................................ 1642
E. Adoption of Test Case Procedures in Kersting Project ........................... 1642
1. The Honolulu Session (June 1985) ........................................... 1642
2. Test Case Procedure ........................................................ 1643
3. Test Case Array ............................................................ 1644
IV. The Maui Session (February 1987) ................................................... 1646
A. Trial Notice ................................................................... 1646
B. Piggyback Agreements ........................................................... 1647
C. Mr. Seery's Withdrawals as Counsel ............................................. 1649
1. The Thompsons .............................................................. 1649
2. The Test Cases ............................................................. 1649
D. Entries of Appearance by Chicoine and Hallett .................................. 1649
E. Evidentiary Issues ............................................................. 1650
1. The Maui Session ........................................................... 1650
2. Dixon I Opinion ............................................................ 1651
V. Kersting Disputes With Program Participants ........................................ 1651
A. The Thompsons .................................................................. 1651
1. The Bauspar Program ........................................................ 1651
2. Deterioration of Thompson/Kersting Relationship ............................ 1651
B. The Alexander Dispute .......................................................... 1655
C. Collection Actions ............................................................. 1656
1. Steve Hane ................................................................. 1656
2. Carl Mott, George Vermef, and Robert Peterson .............................. 1656
VI. Settlements ........................................................................ 1657
A. Internal Revenue Service Policy ................................................ 1657
1. National Office Position ................................................... 1657
2. Regional Counsel ........................................................... 1657
B. Official Kersting Project Settlement Offer (7-Percent Reduction of Deficiency or
Out-of-Pocket Expenses) ...................................................... 1658
C. Deviations From Official Project Settlement Offer .............................. 1658
1. Modified 7-Percent Settlement Offer ........................................ 1658
2. 20-Percent Settlement Offer ............................................... 1659
3. Negotiations for 50-Percent Settlement Offer ............................... 1659
4. Revival of 20-Percent Settlement Offer ..................................... 1660
D. The Thompson Settlement ........................................................ 1662
1. Initial Thompson Settlement Agreement ...................................... 1662
2. First Revision of Thompson Settlement ...................................... 1663
3. Second Revision of Thompson Settlement ..................................... 1665
E. The Cravens Settlement ......................................................... 1665
F. The Alexander Understanding .................................................... 1667
G. The Kozak Decision ............................................................. 1670
VII. Pretrial Developments .............................................................. 1670
A. The Kersting Deposition—Postponed (January 1987) ............................... 1670
B. John Doe Summons/Assessments of Promoter Penalties ............................. 1671
C. Chicoine and Hallett's Withdrawal as Counsel ................................... 1671
D. Mr. Izen's Entry of Appearance ................................................. 1672
E. The Kersting Depostion (October 1988) .......................................... 1672
VIII. Trial of Test Cases (January 1989) ................................................. 1672
A. Mr. Cravens .................................................................... 1673
B. Mr. Thompson ................................................................... 1673
[77 T.C.M. 1633]
C. Mr. Kersting.................................................................... 1674
D. Mr. Alexander .................................................................. 1675
E. Mr. DeCastro ................................................................... 1675
F. Comfort Letters ................................................................ 1676
G. Mr. Izen's Introduction of Evidence of Collection Litigation ................... 1676
IX. Posttrial Developments ............................................................. 1677
A. First Thompson Refund .......................................................... 1677
B. Mr. Izen's Motion To Reopen Record ............................................. 1679
C. Dixon II Opinion ............................................................... 1679
D. Disclosure of Thompson Settlement .............................................. 1679
E. Disclosure of Cravens Settlement ............................................... 1682
F. Respondent's Motions To Vacate ................................................. 1683
G. Attempted Discovery by Counsel for Nontest Case Petitioners .................... 1683
H. Closing of Thompson Cases/Further Refunds ...................................... 1683
I. Closing of Cravens Cases ....................................................... 1684
PROCEDURAL HISTORY OF EVIDENTIARY HEARING ................................................ 1685
I. Developments Before Evidentiary Hearing ............................................ 1685
A. Referral of Thompson and Cravens Settlements to Office of Inspector General .... 1685
B. Revival of 7-Percent Settlement Offer .......................................... 1686
C. Disciplinary Actions ........................................................... 1686
D. Indictment of Mr. Izen ......................................................... 1686
E. Pretrial Conference (July 1995) ................................................ 1686
F. Pretrial Conference (January 1996) ............................................. 1687
G. Denial of Respondent's Motion To Disqualify Mr. Izen ........................... 1687
H. Mr. DeCastro's Withdrawal...To continue reading
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