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dividends from Radtam on his individual Federal income tax
returns.26
After considering the entire record, we hold that respondent
has met his burden of proving that some portion of petitioners’
underpayment for each year in issue is attributable to fraud on
the part of both Mr. and Mrs. Bacon.
III. Statute of Limitations
Section 6501(a) provides, generally, for a 3-year period of
limitations. However, in the case of a false or fraudulent
return with the intent to evade tax, the tax may be assessed, or
a proceeding in court for collection of such tax may be begun
without assessment, at any time. See sec. 6501(c)(1). Where a
joint Federal income tax return was filed, a finding that fraud
was committed by either spouse keeps the period of limitations on
assessment open with respect to both spouses. See Vannaman v.
Commissioner, 54 T.C. 1011, 1018 (1970).
Since we have already found that the returns for the years
in issue were fraudulent, it follows that the exception found in
26Mr. Bacon testified that he did not want to confuse the
credit card company with the fact that he did not draw a salary
but instead had substantial rental income. On their 1991 income
tax return, petitioners reported $135,000 gross rents from
property located at Route 73, Cinnaminson, N.J. (the property
rented to Radtam on which the Jug Handle Inn is located).
Petitioners’ total net rental income reported for 1991 was
$65,277. Petitioners reported gross rental receipts of $368,930,
rental expenses, other than depreciation of $221,217, and
depreciation of $82,435 on their Schedule E, Supplemental Income
and Loss Schedule.
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