Jerry and Patricia A. Dixon, et al - Page 109




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          District of Hawaii sustained the Commissioner's assessments.  See           
          Kersting v. United States, Civil Nos. 90-00304, 91-00747, 92-               
          00593 (D. Haw., Sept. 30, 1994).  Mr. Kersting's appeal of that             
          decision to the Court of Appeals for the Ninth Circuit, docket              
          No. 94-16942, was argued and submitted on May 8, 1996, but                  
          subsequently withdrawn from submission (with an opportunity for             
          supplemental briefing) until after this Court issues its opinion            
          in these consolidated cases.                                                
          D.   Kersting Notice of Deficiency                                          
          The Commissioner sent Mr. Kersting a notice of deficiency                   
          determining deficiencies in and additions to his Federal income             
          taxes for the taxable years 1982 through 1988.  The deficiencies            
          were based upon the Commissioner's determination that cash                  
          payments of so-called leverage loan interest received by Kersting           
          corporations, which were characterized by the District Court in             
          the promoter penalty cases as "alter egos" of Mr. Kersting, and             
          which the Court's Dixon II opinion characterized as fees paid to            
          Mr. Kersting by program participants in exchange for tax                    
          deductions, were includable in Mr. Kersting's gross income.                 
          Mr. Kersting filed a timely petition for redetermination with               
          this Court (assigned docket No. 7448-96), and the case was tried            
          at a Honolulu special trial session that commenced January 27,              
          1999.                                                                       


          9(...continued)                                                             
          of $1,000 (per incident) upon a person who knowingly aids or                
          assists another in understating his tax liability.                          

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