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facts for evidentiary hearing on March 29, 2005; a fourth
supplemental stipulation of facts, filed on June 17, 2005, and a
stipulation of settled issues, filed on June 22, 2005. The facts
stipulated therein are so found. The stipulation of facts and
the attached exhibits are incorporated herein by this reference.
The parties have further stipulated that, for purposes of the
present opinion, the Court may incorporate its findings of fact
as stated in earlier proceedings unless such facts are
inconsistent with the opinion of the Court of Appeals in Dixon V
or are inconsistent with facts stipulated or proven in
proceedings held after the issuance of Dixon V.
I. The Kersting Tax Shelters
A. Background
All the cases before the Court concern proposed
deficiencies, additions to tax, and interest that related to
petitioners’ participation in tax shelter programs promoted by
Kersting. All the programs involved both “primary” loans and
notes and “leverage” loans and notes with corporations organized
by Kersting that have been held to be his alter egos. See
Kersting v. Commissioner, T.C. Memo. 1999-197. These notes
sometimes bore dates that were long before the date on which the
documents were actually executed and even before the date on
which the participant informed Kersting he was ready to
participate in a particular program. Kersting advised
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