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When DeCastro wrote to McWade confirming their deal,
respondent had not asserted fraud for any of the Thompsons’
taxable years that were before the Court, in all three of which
the Thompsons had claimed substantial Kersting-related
deductions. Respondent, in fact, has not asserted fraud charges
against any of the test case or nontest case petitioners with
respect to Kersting deficiencies. Nor, for that matter, did
respondent even assert fraud charges against Kersting himself,
when respondent issued a deficiency notice to Kersting for his
failure to report more than $11 million of fee income he received
over a 7-year period (1982-88) from the Kersting project
petitioners through his alter ego corporations. See Kersting v.
Commissioner, T.C. Memo. 1999-197.
Nor do we believe the facts of the Thompsons’ case would
support an assertion--much less a finding--of fraud against Mr.
Thompson. Petitioners point to Mr. Thompson’s trial testimony,
in which he “admitted that he had taken Kersting deductions while
believing the debt to which the deductions related would not have
to be repaid.” We believe this testimony is true and consistent
with our findings in Dixon II and Dixon III regarding the
Kersting shelters. We further believe this testimony falls far
short of demonstrating, by clear and convincing evidence, that,
by claiming the Kersting deductions, Mr. Thompson specifically
intended to evade a tax known to be owing. Our skepticism is
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