Royce A. Ellis - Page 4




                                        - 4 -                                         
               Respondent subsequently initiated an examination of                    
          petitioner’s years at issue.  On June 13, 2002, respondent                  
          received petitioner’s Form 2848, Power of Attorney and                      
          Declaration of Representative, for 2000 listing John W.                     
          Townshend, an accountant, as the representative to whom                     
          petitioner delegated a power of attorney.3                                  
               On October 21, 2002, petitioner filed a Form 1040, U.S.                
          Individual Income Tax Return, for 2001, including his Schedule C,           
          which reported gross receipts of $4,196,750 and costs of goods              
          sold and deductions totaling $4,238,057.4                                   
               In late 2002, respondent’s Revenue Agent, Dennis Bok,                  
          attempted to reach Mr. Townshend by telephone on 12 occasions.              
          With each attempt, Agent Bok left a message stating his name,               
          telephone number, and a brief message.  Agent Bok received no               
          response from Mr. Townshend.  On January 3, 2003, Agent Bok                 
          prepared a memorandum for his superiors requesting a bypass of              
          power of attorney in which he stated that                                   
               Mr. Townshend, in not communicating with me, is                        
               attempting to delay and hindered [sic] my ability to                   

               3 Petitioner offered Forms 2848 for 1999, 2000, and 2001               
          into evidence which were dated Sep. 20, 2002, Oct. 20, 2001, and            
          Oct. 20, 2001, respectively.  However, the record indicates                 
          respondent only received a Form 2848 for 2000.  The record also             
          indicates that petitioner hired Mr. Townshend after Jan. 31,                
          2002.  Thus, from the record it appears the Forms 2848 for 2000             
          and 2001 were incorrectly dated.                                            
               4 The latter amount comprised returns and allowances of                
          $1,406, costs of goods sold of $3,765,466, and total expenses of            
          $471,185.                                                                   





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