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because the payees of claimed mortgage interest are not
identified on the returns.
Although the Thompsons were audited by the IRS for each of
the 1983-85 years, no deficiencies were ever determined against
them with respect to the Bauspar program, even though, as
respondent’s counsel O’Neill reported: “There are some other
docketed cases where we have disallowed mortgage interest.” We
believe that escaping Bauspar deficiencies was an implied term of
the Thompson settlement; while Sims and McWade knew that the
Thompsons had participated in the Bauspar program, the settlement
that they engineered assured that no Bauspar deficiencies were
determined, assessed, or collected from the Thompsons. Thus, in
the absence of circumstances indicating that the Thompsons’
escape from Bauspar-related deficiencies was not engineered by
Sims or McWade, we conclude that Bauspar relief was part of the
Thompson settlement.61
Because the amounts of the Thompsons’ Bauspar deductions are
incapable of determination with any precision, and because
respondent disallowed Bauspar deductions only sporadically for a
small number of taxpayers, we deal with this aspect of the
Thompson settlement separately from our determination of the
61In so holding, we do not retract our conclusion in Dixon
III that McWade and Sims lied in testifying that the final
Thompson settlement had the purpose and effect of giving the
Thompsons refunds by way of carrybacks of amounts they had lost
by reason of their participation in Bauspar.
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