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to the ultimate tax liability for the taxable year in issue, even
when the return for the preceding year was held to have
fraudulently understated income, Schwarzkopf v. Commissioner, 246
F.2d 731, 734-735 (3d Cir. 1957), affg. on other issues and
remanding on that issue T.C. Memo. 1956-155, or when such return
was not filed until after the due date, Rev. Rul. 2003-23, 2003-8
I.R.B. 511; see also Rev. Rul. 80-355, 1980-2 C.B. 374 (“return
for the taxable year” is joint return filed after due date as
replacement for separate returns filed before due date).
None of the above-cited authorities address circumstances in
which the taxpayer’s original return was filed after a notice of
deficiency had been issued. In this case, the 1988 return was
filed more than 2 years after issuance of the notice (May 14,
1997, versus May 3, 1995) and almost 22 months after the filing
of the petition on July 17, 1995. Under those circumstances we
will disregard the 1988 return as we do not consider it to be a
“return” for purposes of section 6654(d)(1)(B)(i).14 To hold
14 There is no inconsistency between our treating
petitioner’s reporting of the amounts listed on Schedules B and D
of the 1988 return as an admission that those amounts are
includable in 1988 gross income, see the discussion supra in
Section I.A., and our finding herein that the 1988 return is not
a “return” for purposes of sec. 6654(d)(1)(B)(i). The former
conclusion is based upon caselaw which treats a taxpayer’s return
position as an admission by the taxpayer that that position is
correct. That characterization of a taxpayer’s return position
is not contingent upon a finding that the return itself
constitutes a valid return for purposes of various provisions of
the Internal Revenue Code (e.g., secs. 6501(a), 6651(a)(1),
(continued...)
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