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to judgment, and it brought a separate action to reduce the
section 6700 penalties to judgment (Kersting II, Civ. No. 92-
00593 HMF). The 33 corporations involved in the investment plans
brought a wrongful levy action pursuant to section 7426 seeking
various remedies (Pacific Paradise, Civ. No. 91-00747 HMF). The
three cases were consolidated and are hereinafter referred to as
Kersting (Consolidated Cases).
The Dixon taxpayers tried their cases before this Court in
January 1989. In Dixon v. Commissioner, T.C. Memo. 1991-614, the
Court sustained virtually all of the Commissioner's
determinations in each of the test cases. However, the Court's
decisions in Dixon were vacated and remanded sub nom. DuFresne v.
Commissioner, 26 F.3d 105 (9th Cir. 1994), with directions to
conduct an evidentiary hearing to consider the effect of the
Commissioner's admission, subsequent to the trial and entry of
decisions, that there had been secret settlements with two of the
Dixon test case taxpayers. Following an extensive evidentiary
hearing and in a lengthy opinion, the Tax Court reinstated the
decisions in Dixon determining deficiencies in the income of the
taxpayers. See Dixon v. Commissioner, T.C. Memo. 1999-101.
Kersting (Consolidated Cases) was tried in the District
Court before Judge Harold M. Fong in a nonjury trial commencing
May 10, 1994, and concluding June 17, 1994. During the course of
the trial, the District Court considered and denied a number of
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