- 41 -
4. Adequate Disclosure
Finally, petitioner argues that the 6-year period is
inapplicable because petitioner’s return adequately disclosed any
omitted income. See sec. 6501(e)(1)(A)(ii). Adequate disclosure
requires that the return provides a "clue to the existence of the
omitted item." Colony, Inc. v. Commissioner, 357 U.S. 28, 36
(1958). The "clue" does not have to be a detailed revelation of
every fact underlying the transaction, but must be sufficiently
detailed to apprise respondent of the nature and amount of the
transaction. See Estate of Fry v. Commissioner, 88 T.C. 1020,
1023 (1987); Quick Trust v. Commissioner, 54 T.C. 1336, 1347
(1970), affd. 444 F.2d 90 (8th Cir. 1971). The parties disagree
over whether the return provides a clue. Indeed the parties
disagree over which documents comprise the "return".35 Such
34(...continued)
is ambiguous because it does not expressly indicate how
it is to be applied to S corporations and their
stockholders, the Commissioner’s construction of the
section is a reasonable one to say the least, and we
should accept it absent convincing grounds for
rejecting it. As noted in Badaracco v. Commissioner,
464 U.S. 386 (1984), “‘limitations statutes barring the
collection of taxes otherwise due and unpaid are
strictly construed in favor of the Government.’” Id.,
at 392 (quoting Lucia v. United States, 474 F.2d 565,
570 (CA5 1973)). [Bufferd v. Commissioner, 506 U.S.
523, 527-528 n.6 (1993).]
35As a general rule, information contained in a partnership
return will be taken into consideration in determining whether an
omitted item was adequately disclosed on the return of a partner
for purposes of sec. 6501(e)(1)(A)(ii). See Quick Trust v.
(continued...)
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