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Respondent determined that petitioner substantially
underreported gross receipts during the years in issue based on
deposits made to petitioner's bank accounts. After concessions,
the issues for decision are whether petitioner has substantiated
business deductions claimed on his 1990, 1991, and 1992 Federal
income tax returns and whether petitioner is entitled to the
benefit of California's community property law in calculating his
1992 income tax liability.1 In order to decide the second issue,
we must determine whether respondent's reliance on section 66(b)2
to disregard the community property law of California raises a
"new matter" on which respondent bears the burden of proof and,
if so, whether respondent has met that burden.
Some of the facts have been stipulated and are so found.
The first, second, third, and fourth stipulations of fact are
incorporated herein by this reference. Petitioner's legal
residence was in Campbell, California, at the time he filed his
petitions. For convenience, we will combine our findings of fact
with our opinion.
1Petitioner does not dispute that the addition to tax and
accuracy-related penalties apply to the deficiencies that result
from this opinion.
2Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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