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of attorney authorized Mr. Silver to represent both Mr. Burke and
petitioner in respondent's audit.
Mr. Silver and respondent's examining agents met on July 31,
1991, and February 11, 1992, and had several telephone
conversations prior to May 1, 1992. There is no evidence of any
discussion regarding the purported joint filing status of the
returns.
During the audit process, respondent served summonses upon
various banks where petitioners had their business and personal
accounts. Pursuant to section 7609(a)(2), respondent sent a
certified letter to the account holder(s) within 3 business days
of the issuance of the summonses to notify the account holder(s)
of the existence of the summonses.
On May 15, 1992, respondent issued to petitioners a Letter
950 (30-day letter),4 which proposed the following adjustments:
Addition to Tax
Year Deficiency Sec. 6651(a)(1)
1985 $14,752 $4,523
1986 142,690 35,781
1987 476 233
Respondent disallowed deductions for losses allegedly incurred by
Ard Rhei, Inc., an S corporation owned by Mr. Burke, and
deductions for losses resulting from the alleged embezzlement of
4Respondent also sent a copy of the 30-day letter to Mr.
Silver.
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