Wade V. Shang - Page 2




                                         -2-                                          
                                     Background                                       
               Petitioner resided in California at the time the petition              
          was filed.                                                                  
               On August 1, 2006, respondent issued petitioner a notice of            
          deficiency based on petitioner’s criminal tax evasion convictions           
          in the U.S. District Court for the Northern District of                     
          California for the years 1996, 1998, and 1999.2  Respondent                 
          determined deficiencies in petitioner’s Federal income tax                  
          totaling $66,828 and civil fraud penalties under section 6663               
          totaling $50,121.  Petitioner filed a timely petition to this               
          Court on October 16, 2006.  On December 5, 2006, respondent                 
          timely filed his answer.                                                    
          Respondent’s answer states in relevant part:                                
               FURTHER ANSWERING the petition in respect to                           
               respondent’s determination that the petitioner is                      
               liable for the civil fraud penalty pursuant to I.R.C.                  
               section 6663 for taxable years 1996, 1998, and 1999,                   
               respondent affirmatively relies upon the doctrine of                   
               collateral estoppel, and alleges:                                      
          The answer goes on to allege facts regarding petitioner’s                   
          criminal conviction which would tend to support the application             
          of collateral estoppel.  Petitioner did not file a reply.                   
               On March 28, 2007, 113 days after the filing of the original           
          answer, respondent filed a motion for leave to file amendment to            


               1(...continued)                                                        
          the nearest dollar.                                                         
               2Petitioner’s conviction for 1999 was reversed by the U.S.             
          Court of Appeals for the Ninth Circuit.  United States v. Shang,            
          114 Fed. Appx. 813 (9th Cir. 2004).                                         




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