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Dennett disclosed to Mr. Kaply that Mr. Olbres had told him that
there might be a problem involving unreported income with respect
to petitioners' 1987 return.
In February 1990, Mr. Kaply and Jim Bircree, who was Mr.
Kaply's manager, met (February 1990 meeting) with Mr. Dennett and
Ms. Wildes about petitioners' 1987 return that was being exam-
ined. Although Mr. Dennett had telephoned Mr. Kaply a couple of
days after the February 1990 telephone call to inform him that
petitioners planned to attend the February 1990 meeting, peti-
tioners did not appear at that meeting. In anticipation of the
February 1990 meeting, Mr. Kaply prepared a list of questions
with respect to the Indian Head business savings account and two
of the accounts maintained by petitioners at Kennebunk because he
thought that some of the checks deposited into those accounts
might represent income not reported by petitioners for 1987. Mr.
Dennett informed Mr. Kaply at the February 1990 meeting that he
had no knowledge about whether any of the deposits into those
accounts constituted income to petitioners. Immediately after
the February 1990 meeting, Mr. Kaply enlarged his examination of
petitioners' taxable year 1987 to include their taxable year
1988.
A few days after the February 1990 meeting, Mr. Dennett
telephoned Mr. Kaply and informed him that he was no longer
authorized to represent petitioners in connection with Mr.
Kaply's examination of petitioners' taxable year 1987. Approxi-
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