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stock in a subchapter S leasing corporation or an acceptance
corporation and/or enter into a subscription agreement to
purchase stock, all in connection with loans to the participants
by various entities created by Mr. Kersting. The plans were
primarily designed to generate income tax deductions for interest
that the participants purportedly paid to the Kersting entities
on the loans.
The Commissioner determined that participants in
Mr. Kersting's auto-leasing and acceptance corporation plans were
not entitled to deduct: (1) "Interest" that participants claimed
to have paid on either the Auto-Leasing stock purchase or
leverage loans; (2) the participants' pro rata shares of losses
or investment credits from the auto leasing companies; and
(3) "interest" that participants claimed to have paid either on
the acceptance corporation stock purchase or stock subscription
loans.
In Pike v. Commissioner, 78 T.C. 822 (1982), affd. without
published opinion 732 F.2d 164 (9th Cir. 1984), this Court
sustained the Commissioner's disallowances of all deductions for
interest, losses, and credits claimed by participants in
Mr. Kersting's early programs.
B. Kersting Criminal Investigation
While the Pike litigation was underway, Mr. Kersting
continued to promote additional tax shelter programs, which came
to be known as the stock purchase plan, the stock subscription
plan, the leasing company plan, and the CAT-FIT plan. The
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