Donald C. Richardson and Rita M. Allaire - Page 7

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          individuals that either purchased equipment from PCCL or provided           
          goods and/or services to petitioners and PCCL.  The revenue agent           
          also interviewed petitioners and former employees of PCCL.  The             
          revenue agent also requested and obtained documents relevant to             
          the examination.                                                            
               At some point the revenue agent made a referral to the                 
          Criminal Investigation Division of the IRS (CID).  Special agents           
          from CID interviewed petitioners on June 7 and June 15, 1995.               
          During the course of the interviews, petitioners discussed Paige            
          and his involvement with PCCL, as well as the improvements made             
          to their home, the unreported sales of PCCL equipment, and                  
          Dorrial, Inc.                                                               
               Throughout the examination and investigation, petitioners              
          maintained they were unaware PCCL paid for the improvements to              
          their home.  They alleged that Paige made all arrangements for              
          the work to be completed.  Notwithstanding the above, it was                
          discovered that petitioner Allaire had signed PCCL's checks in              
          order to pay for the home improvements.  She claimed to have no             
          knowledge of the purpose of the checks.  Additionally, respondent           
          was provided with specific invoices, memoranda, and a proposal              
          from Wayne Catalano and Al Horn, third-party contractors that               
          completed the improvements to petitioners' home.  These                     
          documents, in total, reflected that PCCL was billed in the amount           
          of $8,549 for work completed at petitioners' home.                          





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