- 46 -
return in an amount in excess of 25 percent of the amount of
gross income stated on the return. See sec. 6501(e)(1)(A). In
determining whether the 25-percent requirement is met, any amount
omitted from gross income that is adequately disclosed in the
return or in a statement attached to the return is not taken into
account. See sec. 6501(e)(1)(A)(ii).
We turn first to the issue of fraud because, except possibly
for 1990, where the 6-year limitation period may apply, absent
fraud, the statute of limitations bars the assessment of the
deficiencies for the years in issue. See sec. 6501(a), (c), (e);
see also York v. Commissioner, 24 T.C. 742, 743 (1955). If fraud
exists for 1990, we need not address whether the 6-year
limitation period applies for that year.
2. Fraud
Respondent contends that Frank and Katherine acted
fraudulently in understating their income tax liability for the
years in issue; thus, respondent asserts, the resulting
underpayments of tax for the years in issue were due to fraud.
Petitioners, however, deny that Frank and Katherine under
reported any income for the years in issue.
Fraud is the intentional wrongdoing on the part of a
taxpayer designed to evade a tax believed to be owing. See,
e.g., Petzoldt v. Commissioner, 92 T.C. 661, 698 (1989). Thus,
courts must decide whether, by the taxpayer’s conduct, he or she
Page: Previous 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 NextLast modified: May 25, 2011