Duane E. Hudspath - Page 2

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               At the time he filed the petition in this case, petitioner             
          (petitioner or Mr. Hudspath), who is legally blind and must rely            
          on others to read to him, resided in Stephens City, Virginia.               
               In 1994, petitioner purchased a chiropractic business and              
          operated it as a sole proprietor.  In the mid-1990s, petitioner             
          changed the form of the business and formed (1) Stephens City               
          Chiropractic (SCC), a limited liability company, (2) Fair Hollow            
          Trust, a domestic trust, and (3) Fair Exit Trust, a foreign                 
          trust.  Petitioner transferred 90 percent of his interest in SCC            
          to Fair Hollow Trust and retained a 10-percent interest in SCC.             
          Petitioner subsequently transferred his interest in Fair Hollow             
          Trust to Fair Exit Trust.                                                   
               In August 1996, petitioner formed WIN Enterprise LC (WIN), a           
          retail sales business.  Petitioner transferred 80 percent of his            
          interest in WIN to Fair Hollow Trust and retained a 10-percent              
          interest in WIN.  A third person (Laurie Eakes) owned the remain-           
          ing 10-percent interest in WIN.                                             
               According to respondent’s records, petitioner was the tax              
          matters partner for both SCC and WIN.  On March 10, 1999, the               
          Internal Revenue Service (IRS) sent to petitioner as the tax                
          matters partner of WIN a notice of beginning of administrative              
          proceeding.1  On April 14, 2000, the IRS sent by certified mail             

               1Respondent’s records do not disclose when the IRS sent to             
          petitioner as the tax matters partner of SCC a notice of begin-             
                                                             (continued...)           





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