- 18 -
Income Adjusted
Interest Sch. E from Gross
Year Income Loss Gambling Income
1987 - - - $4,910
1988 $29 - $1,727 8,456
1989 153 - - 11,684
1990 130 1($2,131) 1,685 10,563
1The Schedule E loss was from Johnson’s Limousine Service,
Inc.
C. IRS Audits and Notices of Deficiency
1. Frank and Katherine’s Audit and Notices of
Deficiency
On August 15, 1991, IRS Revenue Agent Robert Combs (Agent
Combs) notified Frank and Katherine that their returns for the
years in issue were under audit.10 Agent Combs did not meet with
Frank or Katherine regarding income and expense items pertaining
to their returns at any time during the course of the audit of
their tax returns for the years in issue.
On September 22, 1995, respondent mailed 30-day letters to
Frank and Katherine for 1983 through 1990 in which respondent
proposed adjustments for those years relating, among other
things, to understatements of income. Subsequently, on April 4,
1997, respondent issued two notices of deficiency to petitioners
for the years in issue in which respondent determined, among
10 On Feb. 5, 1991, Agent Combs had notified Larry and
Nancy that their 1988 Federal income tax return was under audit.
Subsequently, Agent Combs expanded the audit to include
additional years and family members.
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