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Additions to Tax
Sec. Sec. Sec. Sec.
Year Deficiency 6653(b)(1) 6653(b)(1)(A) 6653(b)(1)(B) 6661(a)
1987 $18,652 N/A $13,989 1 $4,663
1988 10,100 $7,575 N/A N/A 2,525
1 50 percent of the interest due on $18,652.00 for tax year 1987.
Unless otherwise noted, 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.
After concessions,1 we must decide the following issues:
(1) Whether petitioners are liable for additions to tax for
fraud under section 6653(b) for 1987 and 1988.2 We hold they
are.
(2) Whether petitioners are liable for additions to tax for
substantial understatement of tax for 1987 and 1988. We hold
they are.
1 Petitioners have conceded the deficiencies in each year
at issue.
2 Petitioners have also averred that the sec. 6501(a) 3-
year period of limitations on assessment has expired with respect
to the years in issue. Because we conclude that petitioners
filed fraudulent returns for each of these years, the period for
assessment remains open. See sec. 6501(c)(1); Murphy v.
Commissioner, T.C. Memo. 1995-76; Sisson v. Commissioner, T.C.
Memo. 1994-545 (“The definition of fraud for purposes of section
6653 is the same as the definition of fraud for the purpose of
extending the period of limitations under section 6501(c).”),
affd. without published opinion 108 F.3d 339 (9th Cir. 1996).
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Last modified: May 25, 2011