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the language that the Ways and Means Committee used to trigger a
broadening of the fraud exception (sec. 276(a) of the House
bill).
In conference, the House receded and the Senate amendments
were agreed to. See H. Rept. (Conference Report) 73-1385, at 25
(1934), 1939-1 C.B. (Part 2) 627, 634. None of the referenced
committee reports explains the intended meaning of the phrase
“the amount of gross income stated in the return”. Also, we have
not found in the hearings or the floor debates any discussion of
the meaning of that phrase. See Estate of Klein v. Commissioner,
63 T.C. 585, 594 (1975), affd. 537 F.2d 701 (2d Cir. 1976).
The language of section 275(c) continued unchanged in the
later revenue acts and through the Internal Revenue Code of 1939.
Section 275(c), I.R.C. 1939, became section 6501(e)(1)(A),
I.R.C. 1954, with three modifications, as follows:
(1) the 5-year limitations period of former law was
changed to 6 years;
(2) “gross income” from a trade or business was
redefined for these purposes to not include the subtraction
for cost of sales or services; and
(3) for purposes of the numerator of the fraction,
adequate disclosure of an item will preclude that item being
treated as omitted.
The Ways and Means Committee report for H.R. 8300, which
became the Internal Revenue Code of 1954 (H. Rept. 83-1337,
p. 107 (1954)), describes these changes as follows:
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