Donald C. Richardson and Rita M. Allaire - Page 6

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          alleged, inter alia: (1) Information provided to the IRS                    
          regarding PCCL was improperly reported; (2) petitioner sold items           
          from PCCL's inventory and payments for such items were made to              
          petitioner and not reported by petitioner or PCCL; (3) some of              
          petitioners' personal expenses were paid by PCCL, including                 
          payments for improvements to their home; (4) PCCL's books were              
          "being fixed" so as to report little or no tax liability; and (5)           
          petitioners formed a shell company, Dorrial, Inc., to divert                
          funds from PCCL.                                                            
               In support of his allegations in the letter Paige included             
          summaries of (1) equipment removed by petitioner from PCCL's                
          inventory; (2) petitioners' personal expenses paid by company               
          checks and company credit cards; and (3) company equipment                  
          installed at petitioners' home. In addition, Paige attached                 
          schedules, PCCL's balance sheets, and PCCL's financial statements           
          to support the above summaries.  Paige also provided the IRS with           
          names of witnesses to support his allegations and with names of             
          individuals and businesses to whom Paige believed petitioner was            
          selling the inventory items for personal gain.                              
               2.  IRS Examination and Investigation                                  
               Beginning in October 1994, the income tax returns for                  
          petitioners, PCCL, and Dorrial, Inc. (a related entity) were                
          examined.  The exam included the 1993 tax year as well as prior             
          years.   The revenue agent conducting the examination interviewed           

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