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disallowed the claimed charitable contribution deduction3 and
child care credit. Respondent did not process the amended return,
and it was not considered at the time respondent prepared the
notice of deficiency.
Sometime in 1991 or 1992, the Criminal Investigation
Division of the Internal Revenue Service (IRS) began an
investigation of Morris. On March 27, 1992, a search warrant was
issued authorizing a search of Morris' office for various items.
Pursuant to the search warrant, investigators were authorized to
seize, among other things, Federal income tax returns or amended
returns for the years 1989, 1990, and 1991 which included
Schedule A itemized deductions or Schedule C business losses;
amended Federal income tax returns for 1990, 1991, and 1992; and
client lists or other records identifying clients. The search
warrant was executed on March 30, 1992. The return on the search
warrant reflects that 84 boxes of documents were seized,
including 3 boxes which contained information related to
petitioners. These boxes were identified as "Brown, Craig--Tax
records and return", "Craig & Debbie Brown financial records",
and "Amended return, Brown". Subsequently, Special Agent Steven
Boyd returned to petitioners all of their identified documents
which were seized pursuant to the execution of the search
warrant.
3 The remaining itemized deductions were less than the
standard deduction, so respondent disallowed them and allowed
petitioners the standard deduction.
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