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Discussion
The Deficiency Case at Docket No. 7464-00
The only issue we must decide in the case at docket No.
7464-002 is whether petitioner is liable for penalties for fraud
under section 6663(a)3 for the taxable years in issue.4
2Petitioners contend on brief that certain alleged
overpayments and credits should be applied against the income tax
deficiencies in the case at docket No. 7464-00. Petitioners do
not otherwise challenge the income tax deficiencies determined by
respondent in the case at docket No. 7464-00. We shall address
those contentions in the case at docket No. 9452-00L. In the
petition for the case at docket No. 7464-00, petitioners alleged
that “said assessment is premised upon an overstatement of income
in taxpayers amended returns.” Petitioners contend on brief that
certain alleged overpayments should be applied against the income
tax deficiencies in the case at docket No. 7464-00, including the
deficiency of $2,982.63 in 1989, $2,617.74 in 1990, $171.92 in
1991, and $3,007.91 in 1993. Those deficiencies are distinct
from the sec. 6663(a) fraud penalties for petitioner’s 1989,
1990, 1991, 1992, and 1993 tax years.
3Sec. 6663 provides:
SEC. 6663. IMPOSITION OF FRAUD PENALTY
(a) Imposition of Penalty.–If any part of any
underpayment of tax required to be shown on a return is due
to fraud, there shall be added to the tax an amount equal to
75 percent of the portion of the underpayment which is
attributable to fraud.
(b) Determination of Portion Attributable to Fraud.–If
the Secretary establishes that any portion of an
underpayment is attributable to fraud, the entire
underpayment shall be treated as attributable to fraud,
except with respect to any portion of the underpayment which
the taxpayer establishes (by a preponderance of the
evidence) is not attributable to fraud.
(c) Special Rule for Joint Returns.-–In the case of a
joint return, this section shall not apply with respect to a
spouse unless some part of the underpayment is due to the
(continued...)
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