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In 1994, Mr. Nordbrock commenced a proceeding in bankruptcy.
In that proceeding, his attorney was John J. Standifer, Jr.
(Standifer). During 1995, checks totaling $3,060.48 were written
to Standifer. Other checks were written to Standifer and to the
bankruptcy trustee in multiples of $36.50 per month as “payments
to be applied to Mr. Nordbrock’s Chapter 13 Plan”.
On April 25, 1996, the IRS sold the Swan property in order
to enforce a judgment against Mr. Nordbrock for preparer
penalties. Petitioners commenced litigation challenging the sale
and seeking to set it aside. That litigation was still pending
at the time of trial in these cases.
For each of the years in issue, petitioners submitted to the
IRS a joint Form 1040, U.S. Individual Income Tax Return. Next
to their signatures on the form, however, was a reference to
“Note 1”. Note 1 to each return was a statement as follows:
NOTE 1
This return is not voluntarily submitted, nor is it
signed under penalties of perjury.
It is signed and submitted under duress, coercion, and
the threat of criminal prosecution.
See 319 US 624-1943 WEST VIRGINIA STATE BOARD OF
EDUCATION et al. v. BARNETTE et al.
In the notices of deficiency, respondent determined that
petitioners were taxable on the items of income set forth above,
less certain of the deductions claimed on the Forms 1040
submitted by them. Respondent disallowed deductions for legal
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