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1. Held: Ps’ marriage contract did have the effect of
stopping application of Louisiana’s usual community property
laws for Federal income tax purposes. R has conceded that
such a holding would result in P-W’s not being liable for
deficiencies and additions to tax for the years in issue; R
has asserted against P-H increased deficiencies and
additions that are intended to apply if all the omitted
income were properly reportable by P-H.
2. Held, further, R proved by clear and convincing
evidence that P-H had unreported plumbing business income
for 1994 and for 1995, that each year’s unreported plumbing
business income resulted in an underpayment of tax for that
year, and that at least some part of each year’s
underpayment of tax was due to P-H’s fraud. Amounts
determined. Sec. 6663, I.R.C. 1986.
3. Held, further, no portion of the underpayment of
tax for either year was not due to fraud, except to the
extent the underpayment resulted from causes other than
unreported plumbing business income. Amounts determined.
Sec. 6663(b), I.R.C. 1986.
John S. Ponseti, for petitioners.
Susan S. Canavello, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
CHABOT, Judge: By separate notices of deficiency, respondent
determined deficiencies in individual income tax and penalties
under section 66631 (fraud) against petitioners as follows:
1 Unless indicated otherwise, all section and chapter
references are to sections and chapters of the Internal Revenue
Code of 1986 as in effect for the years in issue.
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