Dennis E. Runkle and Debra A. Runkle - Page 9

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               Petitioners submitted a purchase order to the R.V. Center,             
          Inc., on behalf of the Elknur Family Limited Partnership, for the           
          purchase of a 1995 Coachman recreational vehicle for $46,0006 on            
          April 27, 1995.  Petitioners caused the 1995 Coachman to be                 
          titled in the name of the Elknur Family Limited Partnership,                
          although petitioners personally borrowed $32,320 from the Three             
          Rivers Federal Credit Union and traded in a 1994 Starcraft they             
          owned.  In the loan application with the credit union,                      
          petitioners showed Mr. Runkle’s annual “take home pay” as $37,500           
          and Mrs. Runkle’s as $30,000.  Petitioners provided the credit              
          union selected information returns (Forms 1099) for 1993 and 1994           
          regarding income Mr. Runkle received.  Petitioners presented no             
          expense information to the credit union to offset the 1993 and              
          1994 income reported on the Forms 1099.                                     
          Audit Examination                                                           
               Mr. Runkle received correspondence from respondent during              
          1991 through 1995 advising him that he had a requirement to file            
          tax returns.  Mr. Runkle testified that he expected respondent to           
          convince him that his “untaxing” assertions were inaccurate                 
          before he would cooperate with respondent’s examination of 1991             
          through 1995.                                                               
               When Revenue Agent Keith Andrews notified Mr. Runkle that              
          respondent was examining years 1991, 1992, and 1993 and scheduled           

               6Amounts have been rounded to the nearest dollar.                      

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