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limitations applies for each year in issue; therefore, the
statute of limitations does not bar respondent from assessing tax
liability against Frank and Katherine for any year in issue. See
sec. 6501(c). Since we have found fraud for all of the years in
issue, we need not address whether the 6-year period of
limitations under section 6501(e) applies for 1990. We next
address the question of the amount of income Frank and Katherine
omitted from their income for each of the years in issue.
C. Amount of Understatement of Income
Respondent contends that the source and application of funds
analyses, as adjusted and set forth infra in Appendix A, properly
show the amount of income Frank and Katherine understated for all
years in issue. Petitioners contend, on the other hand, that
respondent’s source and application of funds analyses for Frank
and Katherine, Larry, Ronnie, and Sylvia are faulty.
Agent Combs never interviewed Frank or Katherine about the
source and application of funds analyses he performed for the
years in issue. To a large extent, in calculating their
applications of funds for the years in issue, Agent Combs relied
upon source and application of funds analyses he performed for
Larry, Ronnie, and Sylvia for the years in issue, information he
gathered regarding specific asset purchases, Bureau of Labor
Statistics (BLS) estimates of annual expenditures, and
Katherine’s deposition statement that during the years in issue
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