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other courts have, for many years, held taxpayers on questions of
general tax liability, and we believe that this is the
appropriate standard to apply to respondent in this phase of the
proceedings. See Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933); Am. Pipe & Steel Corp. v. Commissioner, 243 F.2d 125,
126-127 (9th Cir. 1957), affg. 25 T.C. 351 (1955).
II. Defining and Applying the Thompson Settlement
A. Overview
In Al-Safin v. Circuit City Stores, Inc., 394 F.3d at 1258,
the Court of Appeals reminded us that its opinion may be
consulted to ascertain what was intended by the mandates. In
Dixon V, the Court of Appeals described the basis of the “secret
settlement agreements” with the Thompsons and the Cravenses as
follows: “A condition of their settlements required Thompson and
Cravens to remain test case petitioners. * * * With respect to
Thompson, McWade agreed to have Thompson’s tax deficiencies
reduced in proportion to his attorney’s fees, which exceeded
$60,000.” Dixon v. Commissioner, 316 F.3d at 1044; fn. ref.
44(...continued)
as a 62-percent reduction. See Part C, infra. We observe that
the significant evidentiary facts on this issue are not in
dispute, so that the burden of proof does not enter into what we
see as a problem of legal characterization. Therefore, the
question does not arise whether we should employ some heightened
standard of proof, such as “strong proof” or “clear and
convincing” proof, that might otherwise arise when a party to a
transaction seeks to disregard the form employed. Our resolution
of this issue does not depend on the allocation or standard of
the burden of proof.
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