Samuel T. Seawright and Carol A. Seawright - Page 1
















                                   117 T.C. No. 24                                    


                               UNITED STATES TAX COURT                                


             SAMUEL T. SEAWRIGHT AND CAROL A. SEAWRIGHT, Petitioners v.               
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 1796-00.                 Filed December 18, 2001.           

                    R’s examination of Ps’ tax liability commenced no                 
               later than July 16, 1998.  After Ps petitioned this                    
               Court to redetermine the deficiency, R’s trial counsel                 
               informally contacted potential third-party witnesses                   
               without providing advance notice to Ps.                                
                    1.  Held:  Sec. 7602(c), I.R.C., which requires                   
               that R give the taxpayer advance notice of third-party                 
               contacts regarding R’s examination or collection                       
               activities, is inapplicable with respect to R’s                        
               examination activities here, which all occurred before                 
               the Jan. 19, 1999, effective date of sec. 7602(c).                     
                    2.  Held, further, sec. 7602(c), I.R.C., is                       
               inapplicable with respect to R’s trial preparation                     
               activities.                                                            
                    3.  Held, further, sec. 7602(e), I.R.C., which                    
               restricts R’s use of financial status or economic                      
               reality examination techniques, is inapplicable with                   
               respect to R’s examination techniques which were                       
               employed before the July 22, 1998, effective date of                   
               sec. 7602(e), I.R.C.                                                   
                    4.  Held, further, Ps bear the burden of proof.                   





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