- 38 -
By reason of our holding with respect to the constructive
dividend issue, we conclude that the Zhadanovs did not underpay
their tax for 1990, 1991 and 1992, and that neither Mr. Zhadanov
nor Mrs. Zhadanov had any constructive dividend income in 1993.
Moreover, although Mr. Zhadanov must include half of his 1993
Social Security payments in income for 1993, it does not appear
that Mr. Zhadanov will have an underpayment for 1993 even after
the adjustment is made. We conclude, therefore, that respondent
has failed to prove that the Zhadanovs underpaid their tax
liability for any of the years at issue. Consequently, we hold
that the Zhadanovs are not liable for the fraud penalty for any
of the years at issue.
C. Other Issues
Because of our holding regarding the constructive dividend
issue, we do not address, and need not decide, the other issues
raised by the parties, including the Zhadanovs’ assertion
regarding the statute of limitations for 1990 and 1991, Mr.
Zhadanov’s double jeopardy argument, and Mrs. Zhadanov’s claim to
relief under section 6015.
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