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Penalty
Year Deficiency I.R.C. Sec. 6663
1990 $29,538 $22,154
1991 32,493 24,370
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure. Increased deficiencies and penalties were alleged in
respondent’s answer. After concessions, the issues for decision
are:
(1) Whether, and to what extent, petitioner received
unreported income from marijuana sales during 1990 and 1991 and
from certain construction activities during 1991;
(2) whether petitioner is liable for self-employment tax for
these years; and
(3) whether there exist underpayments due to fraud for 1990
and 1991 such that (a) petitioner is liable for civil fraud
penalties pursuant to section 6663 and (b) respondent’s proposed
deficiency assessments are not barred by the statute of
limitations.
Background
For 1990 and for 1991, petitioner and his wife filed a joint
Form 1040, U.S. Individual Income Tax Return. The Forms 1040
listed the occupation of petitioner as “construction worker”.
Each return reported wages earned by petitioner’s wife. The 1990
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Last modified: May 25, 2011