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On February 2, 1998, the criminal fraud investigation was
closed without a recommendation for prosecution.
On February 13, 1998, respondent issued a notice of
deficiency to petitioners with respect to their 1992 taxable
year.
On March 10, 1998, Agent Sutton informed petitioners that
the examination was expanding to include the 1996 taxable year
with respect to petitioners, Beacon, and ISOA, Inc. At that
time, Agent Sutton issued an IDR with respect to the 1996 tax
returns for petitioners, Beacon, and ISOA, Inc.9
On August 12, 1998, Agent Sutton issued separate proposed
RARs for petitioners, Beacon, and ISOA, Inc., with respect to the
remaining taxable years under examination. Agent Sutton offered
to have a conference with petitioners and Ms. Stephenson on
August 25, 1998, to discuss the proposed adjustments. Agent
Sutton stated that the proposed RARs were meant to let
petitioners “know what the proposed adjustments were and provide
[Ms. Stephenson] and the taxpayers time to talk to me or provide
more books and records.”
On August 24, 1998, after the proposed RARs had been issued,
Ms. Stephenson notified Agent Sutton that petitioners did not
9 The request included the tax returns for ISOA, Inc., for
the taxable year 1996 ending on August 15 and December 31.
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Last modified: November 10, 2007