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(Kersting) during the late 1970s through the 1980s. Under the
test case procedure, nontest case petitioners in more than 1,000
docketed cases entered into “piggyback” agreements in which they
agreed that their cases would be resolved in accordance with the
outcome of the test cases.2
The test cases initially consisted of 14 docketed cases of
eight petitioners, six of whom (including the Youngs) were
represented by Izen at trial. Kersting, who had retained Izen to
represent those six test case petitioners, initially paid Izen’s
fees, either directly or through alter ego corporations.
Following a 3-week trial, the Court sustained virtually all
of respondent's determinations in each of the test cases. See
Dixon v. Commissioner, T.C. Memo. 1991-614 (Dixon II).3 However,
on June 9, 1992, respondent notified the Court that respondent’s
management had just discovered that, prior to the trial of the
test cases, respondent's trial attorney, Kenneth W. McWade, and
McWade’s supervisor, Honolulu District Counsel William A. Sims,
2 Upon the final disposition of the test cases, the
relatively few nontest case petitioners who did not enter into
piggyback agreements will generally be ordered to show cause why
their cases should not be decided in the same manner as the test
cases. See, e.g., Lombardo v. Commissioner, 99 T.C. 342, 343
(1992), affd. on other grounds sub nom. Davies v. Commissioner,
68 F.3d 1129 (9th Cir. 1995).
3 Prior to the trial of the test cases, the Court had issued
an opinion rejecting the test case petitioners' arguments that
certain evidence should be suppressed and that the burden of
proof should be shifted to respondent. See Dixon v.
Commissioner, 90 T.C. 237 (1988) (Dixon I).
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