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undertaken behind a smokescreen of frivolous tax-protester
arguments.
Clearly, the taxpayers in these cases deserve penalties
under section 6673(a)(1). In determining the amounts of those
penalties, we take account of the repeated incidents of
petitioners’ noncooperation and nonresponsiveness, both during
respondent’s examinations of their returns, see Cary v.
Commissioner, T.C. Memo. 1988-128, affd. without published
opinion, 900 F.2d 262 (9th Cir. 1990), and during the pendency of
this case. We also take account of the fact that, as these
proceedings progressed, and counsel appeared for petitioners,
petitioners’ frivolous arguments multiplied. See infra sec. III.
B.3. Finally, we are aware that petitioner Hae-Rong Ni (also
known as Frank Ni) is here both in an individual capacity and as
trustee for the trusts. By the deemed admissions, petitioners
admit that (1) during the taxable year in question, the trusts
were the alter egos of petitioners Hae-Rong and Lucy B. Ni and
(2) the trusts were shams, created primarily for income tax
purposes. Petitioners abandoned their return positions before
they filed the petitions in these cases. Since petitioners
abandoned their return positions before they filed the petitions
in these cases, we assume that petitioners recognize the truth of
the deemed admissions, and have brought the Trust cases only to
ensure that respondent does not assess the same deficiency
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