- 9 -
erroneous.6 Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933).
Unreported Income
Section 6001 requires taxpayers to maintain sufficient
records to determine their correct tax liabilities. Petitioner
does not dispute that he did not maintain any books or records
for 1986 relating to his income-producing activities. If a
taxpayer fails to keep the required books and records, or if the
books and records maintained do not clearly reflect income,
respondent is authorized by section 446 to reconstruct income in
accordance with a method that clearly reflects the full amount of
income received, Petzoldt v. Commissioner, 92 T.C. 661 (1989),
6 Respondent raised for the first time in the answer, as an
alternative position, that if the Court were to determine that
petitioner is not liable for the additions to tax for fraud for
the years at issue, petitioner would be liable for the additions
to tax for negligence on the entire underpayment for each of
those years, and not, as determined in the notice, only on the
portion of the underpayment attributable to certain determina-
tions in that notice that are discussed below. Rule 142(a). As
indicated supra note 2, respondent conceded at trial the addi-
tions to tax for fraud for 1986 and the deficiency in, and
additions to, tax for 1987. Respondent generally would have the
burden of proof on her alternative position in the answer with
respect to the additions to tax for negligence for 1986. In
arguing the additions to tax for negligence on brief, respondent
does not make clear to the Court whether or not she is advancing
her alternative position that petitioner is liable for the
additions to tax for 1986 on the entire underpayment for that
year. In this connection, however, respondent's counsel advised
the Court in her opening statement before trial that, after
respondent's concession of the additions to tax for fraud, no
issues remain in this case on which respondent has the burden of
proof. Given the state of the record, we conclude that respon-
dent has abandoned her alternative position in the answer with
respect to the additions to tax for negligence for 1986.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011