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A. Underpayments of Tax
In order to determine whether there were any underpayments
of tax, we first determine whether petitioner had unreported
income for 1983 through 1986.25
In the notices of deficiency, respondent determined that
petitioner and Betsy omitted to report, on their 1983 through
1986 joint tax returns, constructive dividends in the form of
personal travel and entertainment expenses paid on behalf of
Betsy by Markette. Other adjustments are briefly described supra
in notes 2 and 3. On opening brief, however, respondent states
that respondent relies only on certain of the travel and
entertainment items to carry the fraud burden of proof. The
latter items are listed in table 15. Table 15 also shows the
totals of the travel and entertainment constructive dividend
adjustments in the notices of deficiency. Because a year is
“open” under section 6501(c)(1) only if respondent succeeds in
proving by clear and convincing evidence that there is an
underpayment due to fraud, we focus in this part of the opinion
on only the items listed in table 15.
25 We have determined, supra, that the statute of
limitations is in issue only for 1983, 1984, and 1985.
Nevertheless, we consider petitioner’s 1986 actions at this point
because any pattern established may have a bearing on our
analysis of other years. E.g., Adler v. Commissioner, 422 F.2d
63, 66 (6th Cir. 1970), affg. T.C. Memo. 1968-100.
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