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concessions by respondent. Respondent has agreed that, inasmuch
as the deficiencies determined against the NJSJ Trust are in the
alternative as a means of protecting respondent against whipsaw,
entry of a decision that there are no deficiencies against the
NJSJ Trust may await either an appeal by Johnson or finality of
the decision in Johnson’s case without an appeal.
We have no doubt that dismissal of the petitions and entry
of decisions against petitioners is not an unjust result in these
cases. The record supports the inference that petitioners never
intended to try these cases on the merits. Petitioners have
brought into the record indications of criminal investigations of
trusts similar to the one involved here, and petitioners’ counsel
has, in effect, represented that these cases are
indistinguishable from Muhich v. Commissioner, T.C. Memo. 1999-
192, affd. ___ F.3d ___ (7th Cir., Jan. 25, 2001). In that case,
the Court held, among other things, that certain trusts should be
disregarded for tax purposes because they lacked economic
substance and that the taxpayers were liable for accuracy-related
penalties under section 6662(a). This Court declined to impose a
penalty under section 6673(a), stating:
We decline to impose a penalty under section 6673.
Although the Muhichs’ position that the trusts had
economic substance was frivolous, we have rejected
respondent’s position [that] the “consulting fees” were
dividends, holding instead the “fees” were
compensation. The Muhichs’ position in this proceeding
was somewhat meritorious to the extent they were
defending against respondent’s determination of
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