Estate of Leon Spear, Deceased, Jeannette Spear, Harvey Spear, and Robin Spear, Administrators, and Jeannette Spear - Page 15

                                       - 15 -                                         

          v. United States, supra at 125, 137; Estate of Mazzoni v.                   
          Commissioner, 451 F.2d 197, 199 (3d Cir. 1971), affg. Mazzoni v.            
          Commissioner, T.C. Memo. 1970-37, supplemented by Estate of                 
          Mazzoni v. Commissioner, T.C. Memo. 1970-144.  To use the net               
          worth method, the Commissioner must meet three requirements:                
               first, the Commissioner must reliably establish a net                  
               worth for taxpayer as of the beginning of the period                   
               under review; second, investigation is required of the                 
               taxpayer's explanation for his net worth increases, if                 
               such "leads" are "reasonably susceptible of being                      
               checked;" finally, the government must suggest a                       
               "likely source" of the unreported income.                              
          Estate of Mazzoni v. Commissioner, supra at 200 (citation and fn.           
          ref. omitted).  Petitioners do not dispute that this is the                 
          applicable legal standard.                                                  
               3.   Whether Respondent Had a Basis in Law for Determining             
                    That Petitioners Are Liable for the Addition to Tax for           
                    Fraud                                                             
               Respondent's basis in law for determining that petitioners             
          were liable for the addition to tax for fraud is section 6653(b)            
          and the many cases which apply it.  The parties do not dispute              
          what legal standards apply under section 6653(b).  We conclude              
          that respondent had a basis in law to determine that petitioners            
          were liable for the addition to tax for fraud.                              












Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011