Larry J. and Patricia A. Sumrall - Page 6




                                        - 6 -                                         
          “Page 2", of Form 1045, Application for Tentative Refund (the               
          Form 1045 page 2).  The Form 1045 page 2 is preprinted with a               
          schedule (Schedule A) on which (pursuant to instructions) is to             
          be computed an NOL.  On the Form 1045 page 2, petitioners                   
          computed an NOL of $13,336.                                                 
               Petitioners filed their joint Federal income tax return for            
          1993 (the 1993 return) on October 7, 1996.                                  
          Dale K. Barker, Jr.                                                         
               Dale K. Barker, Jr., is a certified public accountant, who             
          was retained by petitioners in March 1993.  Mr. Barker was                  
          retained, among other reasons, to prepare returns for the audit             
          years.  Mr. Barker prepared those returns.  He also prepared the            
          1992 and 1993 returns.                                                      
          The Criminal Investigation                                                  
               Rick Raven is employed by the IRS as a Special Agent.  His             
          duties include the conduct of criminal investigations.  In                  
          January 1993, Special Agent Raven began the criminal                        
          investigation.  He was assisted in the criminal investigation by            
          Dick Stufflebeam, a Revenue Agent employed by the IRS.  Special             
          Agent Raven collected information concerning petitioner’s income            
          and expenses for the audit years.  He was not concerned with                
          whether any of petitioner’s tax liabilities for any of the years            
          under investigation could be reduced on account of NOL                      
          carrybacks, since he believed that NOL carrybacks were not a                






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