- 9 - petitioner's 1990 gross income. Because the reconstructed income was sufficiently similar to the income that petitioner had reported on his 1990 Schedule C, the IRS decided not to pursue an audit of petitioner's 1990 Federal tax return. As a result of the audit, respondent sent a statutory notice of deficiency to petitioner for 1988 and 1989 on April 9, 1993. OPINION Respondent argues that petitioner understated his income from Stardust in 1988 and 1989. Respondent contends that petitioner maintained inadequate books and records and that the calendars are the most accurate reflection of petitioner's income. Respondent also argues that petitioner underpaid his taxes for both years due to fraud and, accordingly, that section 6501(c)(1) permits assessment at any time. Petitioner asserts that his records accurately reflect income. On brief, petitioner states that he placed the X marks on the calendars not to count income but to "tell if the dancers were stealing customers, determine how effective telephones were being handled, and gauge the potential profits to be made if the business were being handled correctly". Petitioner further asserts that respondent has not satisfied her burden of proving fraud either for penalty purposes or for statute of limitations purposes.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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