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Posttrial Proceedings in the Test Cases
On December 11, 1991, the Court, through Judge Goffe, issued
its opinion in Dixon v. Commissioner, T.C. Memo. 1991-614 (Dixon
II), sustaining almost all respondent’s determinations that the
Kersting programs in issue lacked substance for tax purposes.
In February 1992, Mr. Kersting sent a lengthy “Dear Friend”
letter to the participants in his programs. He advised them:
We came to talk about the escape routes open to
essentially all of us as a result of the adverse
decision in US Tax Court. There is first the road to
San Francisco where we plan to point out to the 9th
Circuit [Court] of Appeals the items of “reversible
error” with which the Judges opinion is laced and the
procedural flaws which had been disregarded by the
Judge even though he was bound by law to take them into
consideration. The appeal is being prepared by Joe
Izen and shall be filed timely in due course.
* * * * * * *
To my total exhilaration there was not a single voice
of disgruntlement or dissent at either the meeting in
Houston or Los Angeles. On the contrary, there was
unanimous support for the appeal at the 9th Circuit
[Court] of Appeals in San Francisco and for continuing
efforts to right the wrong we have been subjected to in
US Tax Court. * * *
Mr. Kersting’s letter also warned the participants in his
programs that “IRS soldiers * * * will begin another harassment
campaign soon in order to break down your willingness to resist.
It would be well within their character.” Accordingly, he
advised:
In anticipation of this we have formed a defense team
of attorneys who have indicated their willingness to
provide the shield for you if you get singled out for
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