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"gross income" means the total of the amounts received from the
sale of services prior to diminution by the cost of such
services. Sec. 6501(e)(1)(A)(i).
For the 1990 taxable year, petitioner reported gross
receipts of $1,194,606 from his practice, plus $52,810 of
interest income and $5,309 of dividend income. Thus, for
purposes of section 6501(e)(1), petitioner reported $1,252,725 of
gross income on his 1990 return. Twenty-five percent of that
amount is $313,181.25. Petitioner failed to report $344,225 of
gross receipts from his practice, which is in excess of 25
percent of the gross income reported on the return. If
petitioner had suffered an embezzlement loss, the loss would not
reduce his gross income for purposes of the 6-year limitations
period. Sec. 6501(e)(1)(A)(i). Therefore, the 6-year period of
limitations under section 6501(e)(1) applies, and respondent is
not barred from assessing or collecting the deficiency in tax for
the 1990 taxable year.
Issue VI. Whether Petitioner Is Liable for the Accuracy-Related
Penalty Under Section 6662(a) for the 1990, 1991, and 1992
Taxable Years
In the notice of deficiency respondent determined that, if
the fraud penalty does not apply, petitioner is liable for the
accuracy-related penalty under section 6662(a) for negligence or
substantial understatement of tax for each of the years in issue.
Petitioner admitted that he was negligent for the years at issue
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