James E. Stafford - Page 4

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          for its authority" to assess and collect taxes if a Tax Court               
          petition was not filed.                                                     
               By subsequent order, this Court advised petitioner that his            
          grounds for refusing to stipulate or admit lacked merit and                 
          further directed him to file supplemental responses to the show             
          cause order and the motion to review that specifically addressed            
          each factual matter raised by respondent.  Petitioner was further           
          advised that any failure to respond as directed could result in             
          matters being deemed stipulated or admitted.  The Court also set            
          a hearing to review petitioner's responses at the commencement of           
          the trial calendar in Houston, Texas, on June 10, 1996.                     
               Petitioner's supplemental responses failed to specifically             
          address any matter in the proposed stipulations or the requests             
          for admission.  Instead, in terms substantially identical to                
          those previously rejected by the Court, petitioner repeated the             
          BATF argument, and expanded on the argument regarding the lack of           
          implementing regulations, claiming that title 27 of the Code of             
          Federal Regulations, but not title 26 thereof, contains                     
          implementing regulations for Internal Revenue Code sections                 
          concerned with the assessment and collection of taxes.  Thus,               
          petitioner concluded, the absence of regulations in title 26 of             
          the Code of Federal Regulations precludes respondent from                   
          enforcing such Internal Revenue Code sections.                              
               At the June 10, 1996, hearing to review petitioner's                   
          responses, petitioner renewed his argument regarding the lack of            
          implementing regulations and orally moved for dismissal.  In                



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