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appear from two returns of the type before us here”. See id.
The Circuit Court of Appeals reversed because the panel’s
majority concluded that the Commissioner’s adjustment was
incorrect; the Circuit Court of Appeals did not indicate any
disagreement with our statute of limitations analysis.
In Ratto v. Commissioner, 20 T.C. 785 (1953), the taxpayer
and her husband were California residents, operated a liquor
business owned by them in community, and filed separate 1946 tax
returns. See id. at 786. The taxpayer’s husband reported the
liquor business operations on his Schedule C, on which he showed
“gross profit” of $30,462.96 and “net profit” of $10,029.19. He
then “computed his income tax on one-half of this amount [the net
profit] with the explanation ‘� Community Income Reported By
Wife,’ and which he listed as a deduction.” Id. The taxpayer
reported on her Schedule E $5,014.60 as “� community income.”
See id. at 786. Apparently, she did not show on her tax return
any other information about the liquor business. The
Commissioner determined that the taxpayer omitted $10,216.88
gross profits from the liquor business,10 together with about
$3,600 of other small items. See id. at 787. The notice of
deficiency was sent more than 3 years, but less than 5 years,
after the taxpayer filed her 1946 tax return. We held that the
10One-half of $30,462.96, less the $5,014.60 that was
reported.
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