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In a June 3, 1997, letter to Agent Sutton, Ms. Stephenson
requested that a sampling technique be used with respect to the
requested documents since petitioners would have to review over
24,000 documents in response to the latest IDR. Agent Sutton
denied petitioners’ request to sample the expenses listed on the
returns and the related substantiation because there were too
many discrepancies in the returns and submitted documentation to
warrant sampling petitioners’ records. However, Agent Sutton
informed Ms. Stephenson that petitioners should provide only the
information and documentation that was possible without
disrupting their professional lives or spending excessive sums of
money.
On June 30, 1997, petitioners sent their response to the
latest IDR to Agent Sutton. For example, petitioners’ response
to a request for hotel receipts was “Samples are attached”.
However, respondent did not receive any such receipts attached to
the IDR. In describing the $195,000 of licensing fees received
by ISOA, Inc., in 1995 but not reported in the corporation’s
taxable income, petitioners stated that this amount was “held
for $1.5 million buyout of intellectual property from [the
University] within 5 years. Funds can be used to offset approved
costs of licensing intellectual property per [ISOA, Inc./the
University] agreement. [ISOA, Inc.] must show reasonable progress
each year toward accumulation of the $1.5 million”.
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Last modified: November 10, 2007