- 11 -
reported on the original 1987 return, he should not be held
liable for the fraud addition to tax for 1987. A taxpayer’s
fraudulent original return, however, is not purged by the filing
of a subsequent amended return. The fraud was committed when the
original return was prepared and filed. Badaracco v.
Commissioner, 464 U.S. 386, 394 (1984). Petitioner amended his
1987 Federal income tax return only after being notified that the
return would be audited, and even then petitioner underreported
on the amended 1987 Federal income tax return his income by
approximately $5,600.
As indicated, petitioner argues that respondent audited
petitioner's 1986 books and records three times without providing
the written notice to petitioner required under section 7605(b)
and therefore that the notice of deficiency should be treated as
invalid with regard to the fraud addition to tax for 1986. In
general, a taxpayer's books and records are subject to only one
examination per year unless respondent notifies the taxpayer in
writing that an additional examination is necessary. Sec.
7605(b). A taxpayer, however, may waive this requirement by
failing to object to a subsequent examination without receiving
the written notice called for in section 7605(b). Rife v.
Commissioner, 41 T.C. 732, 746-747 (1964), revd. and remanded on
another issue 356 F.2d 883 (5th Cir. 1966); Rice v. Commissioner,
T.C. Memo. 1994-204; Anderson v. Commissioner, T.C. Memo. 1989-
472. Assuming, without so finding, that a second or even third
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011