Samuel T. Seawright and Carol A. Seawright, (2001)

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Samuel T. Seawright and Carol A. Seawright, (2001)

117 T.C. No. 24

UNITED STATES TAX COURT SAMUEL T. SEAWRIGHT AND CAROL A. SEAWRIGHT, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 1796-00. Filed December 18, 2001.

R's examination of Ps' tax liability commenced no later than July 16, 1998. After Ps petitioned this Court to redetermine the deficiency, R's trial counsel informally contacted potential third-party witnesses without providing advance notice to Ps. 1. Held: Sec. 7602(c), I.R.C., which requires that R give the taxpayer advance notice of third-party contacts regarding R's examination or collection activities, is inapplicable with respect to R's examination activities here, which all occurred before the Jan. 19, 1999, effective date of sec. 7602(c). 2. Held, further, sec. 7602(c), I.R.C., is inapplicable with respect to R's trial preparation activities. 3. Held, further, sec. 7602(e), I.R.C., which restricts R's use of financial status or economic reality examination techniques, is inapplicable with respect to R's examination techniques which were employed before the July 22, 1998, effective date of sec. 7602(e), I.R.C. 4. Held, further, Ps bear the burden of proof.

5. Held, further, the allowable business expenses of Ps' salvage business determined. 6. Held, further, the cost of goods sold of Ps' salvage business determined.

Samuel T. Seawright and Carol A. Seawright, pro sese. James R. Rich, for respondent.

THORNTON, Judge: Respondent determined a $6,125 deficiency in petitioners' joint 1995 Federal income tax. Th...

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