In Re Clayton Baker Sally I. Baker, Debtors. Clayton Baker Sally I. Baker v. Internal Revenue Service

Appellants Clayton and Sally Baker appeal from the rejection of their attempt to overturn a stipulated judgment entered against them by the United States Tax Court. We have jurisdiction pursuant to 28 U.S.C. §§ 158 (d) and 1291, and affirm.

I.

The Bakers’ tax problems began in late 1978 or early 1979, when they invested $30,-000 in tax shelters promoted by Maxwell Berg and the Los Angeles law firm of Berg & Allen. Details about the tax shelters, which the IRS eventually disallowed as shams, are sketchy. Both parties agree, however, that Berg filed amended returns on behalf of the Bakers, using the shelters to claim deductions and credits for the tax years 1975 through 1980. The resulting refund cheeks were sent directly to Berg, who negotiated them and, according to the Bakers, kept the money for himself. The Bakers deny authorizing Berg to file the amended returns, or receiving any proceeds of the refund checks. They claim to have discover ed Berg’s fraudulent activities only in 1981 or 1982, when the IRS issued notices of deficiency to investors in the Berg & Allen tax shelters.

The Bakers petitioned the Tax Court for review of the IRS decision in May 1983, arguing…