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with their corporate income tax returns for that year. The
record does not reveal whether at any time petitioner had assets
sufficient to repay the $50,000.
During 1995, petitioner completed, executed, and submitted
to the Internal Revenue Service (the Service) a Form 1040, U.S.
Individual Income Tax Return, for the 1994 taxable year (1994
Form 1040). Before submitting the Form 1040, petitioner struck
the words “penalties” and “perjury” from the verification portion
of that form (jurat) which appeared immediately above her
signature. Before that action, the jurat read: “Under penalties
of perjury, I declare that I have examined this return and
accompanying schedules and statements, and to the best of my
knowledge and belief, they are true, correct, and complete.” The
1994 Form 1040 reflected no tax payments made for that year by
petitioner, either through withholding or estimated payments.
Respondent determined that petitioner’s 1994 Form 1040 did
not constitute a valid Federal income tax return because she did
not sign it under penalty of perjury. In the notice of
deficiency, respondent included $50,000 in petitioner’s income on
the ground that the corporation had relieved her indebtedness to
it by that amount in connection with the reorganization. In
addition, respondent determined that petitioner was liable for an
addition to tax under section 6651(a)(1) because she had not
filed a valid 1994 Federal income return by its due date and for
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