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motions filed by petitioner. See Kersting v. United States, 865
F. Supp. 669 (D. Haw. 1994). On September 2, 1994, the District
Court entered findings of facts and conclusions of law. Adopting
the Commissioner's gross income calculations, the District Court
found, among other things, that petitioner was liable for
penalties under section 6700 for 1982 through 1988 in the
aggregate amount of $1,373,700.2 In calculating the amounts of
the penalties, the District Court found that the 33 corporations
were alter egos of petitioner and that the gross income of the
corporations was therefore attributable to petitioner.
Specifically, the District Court found that:
The government has demonstrated that Kersting derived
as gross income through his corporations $3,478,036.25
from his abusive programs from September 4, 1982,
through July 18, 1984, and $5,129,483.70 thereafter.
Applying the appropriate percentages * * * Kersting
therefore is liable in the amount of $1,373,700.41
pursuant to section 6700.
Though he has the burden of proof in this area,
Kersting presented no credible evidence of what he
considered was the gross income derived or to be
derived from his programs. In fact, Kersting's own
testimony strongly suggested that he generated much
more income from his programs than was included by the
IRS in its calculations and that the Section 6700
penalty is substantially understated.
2 For violations occurring before July 19, 1984, sec. 6700
imposes a penalty of 10 percent of the gross income derived or to
be derived by the taxpayer from an abusive tax shelter. For
violations occurring after July 19, 1984, sec. 6700 imposes a
penalty of 20 percent of the gross income so derived.
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