Dale L. Whittington - Page 3




                                        - 3 -                                         

               On September 9, 1997, as part of his examination of Levitz,            
          respondent's examining agent requested petitioner's account                 
          transcript for the year in issue.  The transcript, known to                 
          respondent as a writ-view (RTVUE), was ordered by the examining             
          agent to determine whether petitioner had filed a 1994 tax                  
          return.  The RTVUE is a summary of petitioner's individual tax              
          return and the various attached schedules.3  The RTVUE showed               
          that petitioner had filed a 1994 tax return with respondent on              
          October 15, 1995.                                                           
               The examining agent examined the RTVUE for large, unusual,             
          or questionable items.  The RTVUE showed that petitioner had: (1)           
          reported business income in the amount of $232,216; (2) claimed             
          itemized deductions in the amount of $23,404; (3) claimed capital           
          losses in the amount of $3,000; (4) claimed net operating losses            
          in the amount of $1,795,146; and (4) claimed Schedule E losses in           
          the amount of $973,006.  The examining agent determined that the            
          net operating loss deductions and Schedule E losses were                    
          questionable and requested the petitioner's 1994 income tax                 
          return from respondent's service center on September 29, 1997.4             


          3                                                                           
               A RTVUE is a record of line items from Forms 1040, 1040A,              
          and 1040EZ and their accompanying schedules.  The RTVUE is                  
          created as the returns are processed at the service center.                 
          4                                                                           
               For whatever reasons, the examining agent never received the           
          original of petitioner's 1994 income tax return from the service            
          center.                                                                     




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