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In the same memorandum, District Counsel further requested:
"Please obtain a copy of the transcript of the allocution
hearing. * * * The transcript is a matter of public record; it
is not grand jury material."2
Respondent thereafter drafted the statutory notice of
deficiency issued to petitioners for their taxable year 1986,
using the figures as corrected to match those in exhibit 3. In
the notice of deficiency, respondent determined that, for 1986,
petitioners had failed to report capital gains totaling
$5,084,483. Respondent accordingly determined a deficiency of
$998,754 in petitioners' Federal income tax for their taxable
year ended December 31, 1986, plus an addition to tax for fraud
under section 6653(b)(1)(A) of $749,066 and a time-sensitive
penalty for fraud under section 6653(b)(1)(B).
On January 29, 2001, respondent obtained an order, pursuant
to rule 6(e)(3)(C)(i), from the U.S. District Court for the
Southern District of New York. The order grants respondent
access to grand jury information from petitioner's criminal
proceeding for purposes of the instant case.
Proceedings Before This Court
During the course of substantial pretrial activities before
this Court, respondent, on February 8, 2002, served upon
2Although the evidence in the present proceedings contains
the transcript of proceedings in the Fatico hearing, it includes
few, if any, of the exhibits introduced during that hearing.
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