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primarily through this proceeding, that they did not realize for
the subject years the amount of taxable income determined in the
notices of deficiency. As to this allegation, petitioners have
never denied during this proceeding that they had taxable income
in those years but have simply argued that respondent has not
proven the amounts of income. Petitioners also alleged in their
petition that they are entitled to personal exemptions,
deductions, and business-related expense deductions not reflected
in the notices of deficiency. Petitioners called no witnesses at
trial, opting instead to submit their case to the Court on the
basis of the stipulated facts and exhibits and their limited
cross-examination of the agent, the only witness who did testify
at trial.
I. Use of Dummy Returns
Petitioners alleged in their petition that respondent’s
notices of deficiency are invalid because they were not based
upon a “return” within the meaning of section 6020(b).7
7 Section 6020(b) provides:
SEC. 6020(b). Execution of Return by Secretary.--
(1) Authority of Secretary to execute return.--If
any person fails to make any return required by any
internal revenue law or regulation made thereunder at
the time prescribed therefor, or makes, willfully or
otherwise, a false or fraudulent return, the Secretary
shall make such return from his own knowledge and from
such information as he can obtain through testimony or
otherwise.
(continued...)
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Last modified: May 25, 2011