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constructive dividends. We admonish the Muhichs that
we shall not be inclined to exercise our discretion
under section 6673 so favorably in the future if
presented with similar arguments by them, and we may
impose a penalty.
Also in the record in these cases is a transcript and a copy of a
stipulated decision in Crockett v. Commissioner, docket No.
20759-97, which also involved a sham or abusive trust. In that
case, the decision entered pursuant to stipulation of the parties
included a penalty under section 6673 against Izen’s client.
In these cases, in view of Izen’s express admissions that he
was responsible for the failure to comply with discovery orders,
we believe that the penalty should be imposed on him. Although
he conceded at the time of hearing that he was wrong and that he
would pay, he has argued in written documents that “mere
negligence” was not enough to justify a sanction. There may be
some question as to whether, before we impose costs, we must find
that Izen acted in bad faith. See The Nis Family Trust v.
Commissioner, 115 T.C. 523 (2000). We have no trouble finding
that, in these cases, he did.
Izen has a long history of involvement with sham trusts,
both as counsel of record and as counsel rendering an opinion on
which taxpayers unfortunately relied. See, e.g., United States
v. Buttorff, 761 F.2d 1056 (5th Cir. 1985), affg. 563 F. Supp.
450 (N.D. Tex. 1983); Watson v. Commissioner, 690 F.2d 429 (5th
Cir. 1982); Lund v. Commissioner, T.C. Memo. 2000-334; Para
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