Caralan Trust, et al. - Page 10




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               Whether the C. Shirleys are liable for penalties under                 
          sections 6662(a) and 6673(a)(1).                                            
                                  FINDINGS OF FACT                                    
               Some facts have been stipulated and are so found.  The                 
          stipulations of facts filed by the parties, with accompanying               
          exhibits, are incorporated herein by this reference.  The                   
          J. Shirleys are deemed to have admitted certain facts on account            
          of their failure to respond to respondent’s request for                     
          admissions.  See Rule 90(c).  Such facts deemed admitted are                
          conclusively established for purposes of this action (with                  
          respect to the J. Shirleys) and are incorporated herein by this             
          reference.                                                                  
          Residences                                                                  
               The J. Shirleys and C. Shirleys resided in California when             
          their petitions herein were filed.                                          
          Respondent’s Examinations                                                   
               Prior to determining deficiencies in both the J. and C.                
          Shirleys’ 1995 taxes, respondent examined their 1995 Federal                
          income tax returns.  In the course of that examination,                     
          respondent’s agent requested a meeting with the J. and C.                   
          Shirleys, at which they were to produce books and records used to           


               5(...continued)                                                        
          computational matters, the resolution of which will depend upon             
          our disposition of the other issues.  The C. Shirleys have not              
          separately challenged such liability and deduction, and we shall            
          not further discuss those items.                                            





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