James J. McCarron III and Michelle McCarron - Page 5

                                        - 4 -                                         
               Petitioners filed delinquent income tax returns for 1993 and           
          1994.  The 1993 return was filed on December 19, 1996, and the              
          1994 return was filed on June 10, 1996.  Petitioners' 1995 return           
          was timely filed.  Attached to each return was a Schedule A and             
          Schedules C.  Petitioners reported adjusted gross income of                 
          $18,731, $16,756, and $17,353 for 1993, 1994, and 1995,                     
          respectively.                                                               
          A.  Examination of Petitioners' Tax Returns                                 
               In a letter dated November 1, 1996,2 petitioners were                  
          informed that respondent was proceeding with the examination of             
          their 1993 tax year, for which a return had not yet been filed.             
          Additionally, the examination had been expanded to include the              
          Forms 1040, Individual Income Tax Return, they filed for 1994 and           
          1995.  Forms 4564, Information Document Request (IDRs), were                
          enclosed with the letter.  Because of the audit results of                  
          petitioners' prior years, unreported income and the lack of                 
          substantiation of business deductions were significant areas of             
          inquiry.                                                                    
               Mr. McCarron (petitioner) met with respondent on December              
          19, 1996, and presented an original delinquent return for 1993              
          for filing.  Petitioner did not have any documentation used in              

               2Sec. 7491, which shifts the burden of proof to the                    
          Secretary in certain circumstances, is inapplicable to this case.           
          See Warbelow's Air Ventures, Inc. v. Commissioner, 118 T.C. 579,            
          582 n.8 (2002) (sec. 7491 is effective for court proceedings                
          arising in connection with examinations commencing after July 22,           
          1998), affd. 80 Fed. Appx. 16 (9th Cir. 2003).                              




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011