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Respondent warned petitioner more than 2 months before trial
that taxpayers in sham trust cases have been penalized under
section 6673 for advancing frivolous arguments. On June 19,
2000, respondent’s counsel informed petitioner that he was
prepared to move for a penalty under section 6673 if petitioner
continued to insist that the $103,420 paid to Universal for work
done by petitioner was not petitioner’s income.
On June 13, 2000, petitioner had stipulated that during
1993, WWMC paid Universal $95,596 for work done by petitioner.
Trial began on June 27, 2000, after the 1-week interval
arranged by the Court; the parties submitted a Second Stipulation
of Facts. In that document, petitioner agreed to a number of
additional stipulations concerning the payment of $103,420 to
Universal for work done by petitioner, and concerning deposits
made to Universal’s bank account during 1993. However,
petitioner refused to testify.
The Parties’ Contentions
Respondent now asserts that petitioner’s gross income
includes $103,420 paid to Universal during 1993 for work done by
petitioner.6 According to respondent, this amount is includable
6 The statutory notice asserted that petitioner’s income
included $104,786 in unreported business gross receipts.
Respondent now claims that petitioner’s gross income should be
increased by only $103,420, the amount the record establishes was
paid to Universal (and deposited in its bank account) for
(continued...)
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