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construction expenses on its corporate tax returns and that the
Atkinsons fraudulently failed to include the construction
expenses as income on their individual tax returns.7 Respondent
also determined that petitioner fraudulently deducted numerous
charges incurred on its credit cards and that the Atkinsons
fraudulently failed to include the credit card charges8 in
income.9
Additionally, in the notices of deficiency, respondent
imposed additions to tax pursuant to sections 6653(b) and 6661 on
petitioners. As to petitioner, we review respondent’s
determinations of deficiencies and additions to tax. As to the
Atkinsons, they concede that they committed fraud in failing to
report the construction expenses as income on their individual
7 In addition to the construction expenses already
discussed, respondent initially classified certain additional
amounts as construction expenses. Respondent determined that
petitioner fraudulently deducted those amounts and that the
Atkinsons fraudulently failed to include those amounts in income.
The parties are in agreement with regard to the tax consequences
of those amounts, and we do not further discuss those additional
amounts in this opinion.
8 The tax treatment of a portion of the credit card charges
is subject to a stipulation by the parties. Our discussion of
the credit card charges is with regard to amounts not subject to
the stipulation.
9 Because the Atkinsons filed their individual tax returns
based on a calendar year and petitioner filed its corporate tax
returns on a fiscal yearend (other than the short return year),
the amounts listed on the Atkinsons’ notice of deficiency with
regard to the construction expenses and credit card charges
differ from the amounts listed on petitioner’s notice of
deficiency.
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