- 7 -
Mr. Raclaw prepared a two-page schedule of the tax
information for the tax year 1986 that was a summary of
petitioners' Forms 1099, interest, money market, and Form W-2
income. This schedule was Mr. Raclaw's only workpaper for
petitioners' 1986 tax year. The information contained in the
two-page schedule was derived by Mr. Raclaw from petitioners'
bank statements. In calculating the total amount of Schedule C
income for petitioner, Mr. Raclaw totaled the Forms 1099 that
were received by petitioner. Mr. Raclaw did not prepare a
writeup, a cash receipts journal, or a cash disbursements
journal. As part of his preparation of petitioners' tax returns,
Mr. Raclaw performed an income versus deposit analysis together
with an analysis of petitioners' Forms W-2, Forms 1099, and
Schedule E income in an attempt to verify petitioners' total
income for the years in issue. Mr. Raclaw made the determination
to report income for all the years in issue based upon the Forms
1099 received from the insurance carriers. Dr. Rao did not
examine his Federal income tax returns before signing them.
The IRS Audit
Revenue Agent Randall Gardner (agent Gardner) was assigned
to work on the Rao audit in November of 1988. The audit
encompassed the 3-year period from 1986 through 1988. As agent
Gardner was an inexperienced agent, Roy Schwarmann (agent
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011