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Section 6501(e)(1)(A)(ii) requires that any disclosure of
gross income be made “in the return, or in a statement attached
to the return”. Petitioners’ 1995 and 1996 returns did not make
reference to or have attached to them the returns of the
petitioner trusts, or disclose in any manner that petitioners had
any relationship with the petitioner trusts. Thus, the
individual returns offer no “clue” as to the existence, nature,
or amount of the omitted income.
Relying on Benderoff v. United States, 398 F.2d 132 (8th
Cir. 1968), petitioners assert that, even though their individual
returns did not disclose the omitted gross income, we must look
beyond petitioners’ returns to the trust returns. When taken
together, they argue, the individual and trust returns adequately
disclose the omitted gross income. We rejected this same
argument in Reuter v. Commissioner, T.C. Memo. 1985-607.
In Reuter, the taxpayers failed to report in their
individual return income attributable to them from an S
corporation. The individual return contained no indication that
the taxpayers were shareholders of an S corporation or that they
derived any nonsalary income from such a corporation.9 The
taxpayers cited Benderoff v. United States, supra, for the
proposition that consideration must be given not only to their
9 The taxpayers disclosed that they received wages from the
S corporation, but they did not indicate that it was an S
corporation or that they were the shareholders thereof.
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