Jerry and Patricia A. Dixon, et al. - Page 51

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          the Honolulu District Counsel’s Office, served as the project               
          attorney.                                                                   
          Once a tax shelter project is assigned to a particular                      
          District Counsel’s Office, that District Counsel has the                    
          authority to settle any individual case in the project.  The                
          District Counsel generally is expected to adhere to the official            
          project settlement offer.  Nevertheless, the District Counsel has           
          the authority in special circumstances to settle individual tax             
          shelter project cases on a basis different from the project                 
          settlement offer.                                                           
                    2.   Bauspar                                                      
               One Kersting program that was not part of respondent’s                 
          Kersting project was known as Bauspar.  Kersting had promoted the           
          Bauspar program as a combination savings and low interest                   
          mortgage plan.  While the precise manner in which the Bauspar               
          program operated for each participant remains uncertain, the                
          total amount of home mortgage interest deducted by Bauspar                  
          participants appears to have been overstated.                               
                Respondent’s officials believed that there were relatively            
          few participants in the Bauspar program, that there was no easy             
          way to identify participants in the Bauspar program from a review           
          of their income tax returns, and that an investigation of Bauspar           
          deduction claimants would not be cost effective.  Accordingly,              
          respondent ultimately decided not to systematically pursue                  





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