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members of her family took to recover a portion of the forfeited
funds. However, Mrs. Zhadanov did not adequately explain why she
was unable to prepare, or arrange for the preparation of,
Vortex’s return in the time between Mr. Zhadanov’s guilty plea
and Vortex’s filing deadline. In addition, Vortex did not make
any additional arguments regarding this issue. We conclude that
Vortex has failed to prove that it exercised ordinary business
care and prudence or that its failure to file was not due to
conscious, intentional, or reckless indifference. Accordingly,
we hold Vortex liable for the addition to tax under section
6651(a) with respect to FYE 1993.
D. The Limitations Issue
Because we have found that Vortex fraudulently
underreported its income and underpaid its income tax for its FYE
1991, we hold that respondent is not barred by section 6501(a)
from assessing a deficiency with respect to Vortex for its FYE
1991.
IV. The Zhadanov Issues
A. Respondent’s Adjustments to Income
Respondent has determined that the Zhadanovs had unreported
constructive dividend income during each of the years at issue
attributable to the unreported cash from vial sales that the
Zhadanovs kept in their safe. In addition, respondent has
determined that Mr. Zhadanov failed to include in income Social
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