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that petitioner had cooperated at all levels; and (2) for
imposition of a penalty on respondent under section 6673(a)(1),
on the ground that respondent, by not offering petitioner an
Appeals Office conference before issuing the statutory notice,
had deprived petitioner of administrative remedies.
During both trial days, petitioner continued to claim that
the trusts were valid for Federal income tax purposes. The first
day of trial dealt primarily with the validity of the trusts and
events occurring during the audit. These subjects were also
covered during the second day of trial in the cross-examination
of the revenue agent who had examined petitioner’s returns and in
the direct testimony of petitioner. The second day of trial also
covered petitioner’s attempts to prove additional deductions
using amended returns for petitioner and the trusts.
More than 3 months after the second day of trial, and
shortly before posttrial briefs were originally due, respondent
and petitioner entered into a superseding stipulation of settled
issues that resolved many of the issues previously in dispute
between the parties. The parties stipulated that the trusts were
invalid for Federal income tax purposes, and that all the trust
income and deductions would be allocated to petitioner. In
addition, both petitioner and respondent made substantial
concessions regarding the deficiencies, including deductions
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