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T.C. 855 (1983). The Court distinguished the notices of
deficiency issued to the test-case taxpayers from the notice of
deficiency at issue in Scar on the ground that adjustments in the
notices of deficiency could be connected with items reported in
the test-case taxpayers' tax returns.
The Court's decision in Dixon II was vacated and remanded on
appeal to the U.S. Court of Appeals for the Ninth Circuit in
Dufresne v. Commissioner, 26 F.3d 105 (9th Cir. 1994).
Specifically, in response to respondent's post-trial admission
that Mr. McWade had entered into secret settlement agreements
with two of the test case taxpayers, John Thompson and John
Cravens, prior to the trial of the test cases, the Court of
Appeals remanded the test cases to this Court with instructions
to conduct an evidentiary hearing "to determine the full extent
of the admitted wrong done by the government trial lawyers." Id.
at 107. The Court of Appeals, citing Arizona v. Fulminante, 499
U.S. 279, 309 (1991), directed the Court to consider "whether the
extent of the misconduct rises to the level of a structural
defect voiding the judgment as fundamentally unfair, or whether,
despite the Government's misconduct, the judgment can be upheld
as harmless error." Id. In carrying out this mandate, this
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