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lists on Schedule E, Supplemental Income and Loss, $32,683 of
“Royalties received & interest”, offset by $81,556 of claimed
expenses. On the 1998 purported return, petitioner lists no
earned income but claims a “1997 loss carry over” of $407,246, a
$3,783,344 earned income credit, and a refund of the same amount.
In the jurat above his signature, petitioner scratched out the
words “Under penalty of perjury.”3
With respect to each of petitioner’s 1996, 1997, and 1998
tax years, respondent prepared a “substitute for return” (SFR).4
3 Petitioner claims to have filed with the Internal Revenue
Service (IRS) similar purported returns for his tax years 1996
and 1997. The 1996 purported return, which is in evidence, lists
on Schedule E, Supplemental Income and Loss, $39,648 of
“Royalties received & interest”, offset by $78,915 of claimed
expenses. On the 1996 purported return, petitioner lists no
earned income and claims a “1995 loss carry over” of $325,372, a
$517,146 earned income credit, and a $517,305 refund. Similarly,
the 1997 purported return, which is also in evidence, lists on
Schedule E $36,859 of “Royalties received & interest”, offset by
$79,466 of claimed expenses. On the 1997 purported return,
petitioner lists no earned income and claims a “1996 loss carry
over” of $364,639, a $1,833,156 earned income credit, and a
$1,833,719 refund.
On each of these purported 1996 and 1997 returns, as on his
purported 1998 return, petitioner scratched out the words “Under
penalty of perjury” in the jurat above his signature. There is
no evidence in the record that petitioner ever submitted the
purported 1996 and 1997 returns to the IRS.
Pursuant to sec. 6702, respondent assessed a frivolous
return penalty with respect to petitioner’s purported 1998
return. The frivolous return penalty is not at issue here.
4 The term “substitute for return” (SFR) has been used to
describe a return prepared by the Commissioner pursuant to sec.
6020(b) where the taxpayer did not file a return. It is
(continued...)
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Last modified: May 25, 2011