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deductions in excess of Kersting interest deductions that the
Richardses actually claimed.17
Similarly, as observed in the Court's Dixon II opinion,
respondent's alternative determinations in the notice of
deficiency issued to the Cravenses overstated their deficiency
for 1980. The Court ordered that the Cravenses' deficiency for
1980 be reduced to account for: (1) The elimination of
respondent's alternative determination that the Cravenses failed
to report $18,000 in dividends paid by Candace; and (2)
respondent's failure to eliminate the capital gain of $7,200
reported by the Cravenses for 1980 on the disposition of their
Candace stock.
III. Commencement of Kersting Project
A. Tax Shelter Projects and Test Case Procedures
1. Overview
The large volume of cases generated by the Commissioner's
disallowances of deductions claimed by taxpayers participating in
large tax shelter programs during the late 1970's and early
1980's created the largest inventory of cases ever docketed in
the Tax Court. Among the responses of the Internal Revenue
Service and the Tax Court were the development of procedures that
17 Test case petitioners Terry D. and Gloria K. Owens
alleged in their petition that respondent disallowed legitimate
interest deductions in their notice of deficiency. However, it
appears that the allegation was not pursued by or on behalf of
the Owenses, inasmuch as the decision entered by the Court in
their case, following the issuance of the Court's opinion in
Dixon II, was consistent with the deficiency determined by
respondent.
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