John R. Rinn and Donnie J. Rinn - Page 4

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          Mr. Rinn’s dental practice.3  At some point, respondent commenced           
          an examination of these tax years.  Revenue Agent Greg Hutchinson           
          (RA Hutchinson) was assigned to this examination.                           
               RA Hutchinson made numerous requests to petitioners for                
          information and records relating to Mr. Rinn’s dental practice,             
          including any journals, ledgers, expense receipts, credit card              
          receipts, bank statements, canceled checks, deposit slips, and              
          other items.  On several occasions RA Hutchinson also requested             
          that petitioners schedule an appointment to discuss these                   
          matters.  Petitioners provided no records and failed to schedule            
          an appointment; they responded to RA Hutchinson’s requests with             
          frivolous arguments.                                                        
               Eventually, RA Hutchinson issued a summons directing                   
          petitioners to appear and produce certain requested records.                
          Petitioners failed to comply with this summons, and enforcement             
          of the summons was sought in a Federal District Court.  In the              
          enforcement proceedings, Mr. Rinn still failed to produce the               
          requested records.  The District Court held Mr. Rinn in contempt            
          of court and put him in jail.                                               
               After Mr. Rinn spent several days in jail, Mrs. Rinn                   
          provided records relating to Mr. Rinn’s dental practice which she           


               3 Petitioners filed Federal income tax returns for tax years           
          preceding 1995.  For example, petitioners filed Forms 1040, U.S.            
          Individual Income Tax Return, for tax years 1993 and 1994,                  
          reporting net profits of $157,510 and $163,876, respectively,               
          from Mr. Rinn’s dental practice.                                            




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