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did business as a smoke shop in Oklahoma. They also owned El
Dorado Investments, Inc. (El Dorado), and Cornerstone Capital
Resources, Inc. (Cornerstone), two S corporations that held
interests in four Sonic Drive-In restaurants (Sonic restaurants)
located in Tennessee, Kentucky, and Kansas. The Masons also
owned two commercial properties that they leased to Sonic
restaurants located in Tennessee.
Sometime before 1995 the Masons met Dan Meador (Meador), the
chairman of a tax-protester group that questions the legality of
the Federal income tax system. Meador was convicted of felony
obstruction of justice charges relating to a 1995 Federal
investigation of two other Oklahoma-based tax protesters. When
respondent initiated a collection action during 1995 against Mrs.
Mason regarding her 1991 tax liability, petitioner and his wife
each sent a letter to respondent on May 24, 1995, attempting to
revoke their status as United States citizens. Mrs. Mason then
sent an additional letter on July 14, 1995, advancing other
frivolous, tax-protester type arguments.
The Masons, also during 1995, transferred their residence
and business interests to various trusts they controlled.
Petitioner did not maintain a bank account in his name, but,
rather, used accounts in his wife’s name and in the name of El
Dorado. In addition, petitioner did not make estimated tax
payments in 1995.
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