Dennis E. Runkle and Debra A. Runkle - Page 28

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          party if the third party complied with the summons.  For example,           
          Mr. Runkle threatened to sue Mr. Bills of R&D if Mr. Bills                  
          provided documents of the Elknur Family Limited Partnership                 
          pursuant to the third-party summons issued to R&D.                          
               Respondent argues, and we agree, that petitioners’ actions             
          demonstrate that petitioners intended to impede respondent’s                
          examination and investigation.  We find that petitioners refused            
          to cooperate with respondent’s agents, and their efforts to quash           
          summonses and otherwise hamper his investigation are further                
          indicia of fraudulent intent.                                               
               6.   Asserting Frivolous Arguments                                     
               Petitioners also relied on frivolous and meritless arguments           
          to impede or otherwise hinder respondent’s ability to determine             
          the correct amount of tax liability.  Petitioners included these            
          arguments in correspondence to respondent9 as well as in support            
          of their numerous petitions to quash respondent’s summonses and             
          in their motion to dismiss this case, filed February 17, 2004.              
          For example, petitioners asserted in their submissions that the             

               9The Court of Appeals for the Third Circuit takes the                  
          minority view that merely notifying the Commissioner that the               
          taxpayer will not comply with filing and payment obligations is             
          inconsistent with an intent to defraud.  See Granado v.                     
          Commissioner, 792 F.2d 91 (7th Cir. 1986), affg. T.C. Memo. 1985-           
          237; Raley v. Commissioner, 676 F.2d 980 (3d Cir. 1982), revg.              
          T.C. Memo. 1980-571; Price v. Commissioner, T.C. Memo 1996-204.             
          This minority view has not been followed in other circuits                  
          including the Seventh Circuit, to which this case is appealable.            
          See Granado v. Commissioner, supra.                                         

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