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During 1995, petitioner also worked as a food packaging
machine operator at Safeway Markets.
Taxable Years 1995 and 1996
Examination of the Returns
Petitioner and Mr. Pacheco filed jointly for 1995 and 1996
Forms 1040, U.S. Individual Income Tax Return, prepared by a paid
preparer. In 1997, the returns were selected for examination,
and the case was assigned to Revenue Agent Patrick Lunny (RA
Lunny).
During the examination process, RA Lunny interacted only
with petitioner or with one of her representatives. It is not
disputed that RA Lunny never met with or spoke with Mr. Pacheco
during the audit because Mr. Pacheco did not speak English.
RA Lunny determined that petitioner and Mr. Pacheco had
unreported income from Contractor on the basis of the third party
information returns that the farmers filed with the Internal
Revenue Service (IRS). RA Lunny also determined that certain
business expense deductions for Contractor were not substantiated
on the Schedules C, Profit or Loss From Business, for 1995 and
1996.
On October 23, 1998, respondent issued to petitioner and Mr.
Pacheco a statutory notice of deficiency, determining for 1995
and 1996, respectively, deficiencies in Federal income taxes of
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