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not filed Federal income tax returns for tax years after 1995.
Federal Income Tax Returns--Sandbar
Wholesale Trust and Sandbar Real Estate Trust
As of the date of the trial in this case, neither Sandbar
Wholesale Trust nor Sandbar Real Estate Trust had filed a Federal
income tax return or paid any Federal income tax.
Respondent’s Examination of
Petitioners’ 1994 and 1995 Joint Returns
On April 30, 1996, respondent’s revenue agent Jon Eric
Powell (revenue agent Powell) made initial contact with petition-
ers via the telephone with respect to respondent’s examination of
petitioners’ 1994 joint return. Shortly thereafter, revenue
agent Powell sent petitioners a letter (examination letter)
formally notifying petitioners that their 1994 joint return was
under examination. In response to the examination letter, on a
date after April 30, 1996, that is not disclosed by the record,
petitioners indicated to revenue agent Powell that they did not
have to provide him with any records with respect to respondent’s
examination of their 1994 joint return. Consequently, on a date
before May 30, 1996, that is not disclosed by the record, revenue
agent Powell issued a summons (summons) to petitioners, which
required them to appear before him on May 30, 1996, and to
produce certain records with respect to respondent’s examination
of petitioners’ 1994 joint return.
On May 30, 1996, in response to the summons, petitioners met
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