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1121 (5th Cir. 1975); Johnson v. Commissioner, T.C. Memo.
1999-48; House v. Commissioner, T.C. Memo. 1995-92. Petitioners
misrepresented the profitability of the limousine service to Ms.
Pavlak. She sued petitioners for fraud and misrepresentation
relating to her purchase of Top Play and received a judgment in
the amount of $95,000. Petitioners’ dishonesty in their business
transaction with Ms. Pavlak is evidence of petitioners’
willingness to defraud respondent.
C. Conclusion as to Fraud
We find that the circumstances of this case, taken as a
whole, clearly and convincingly establish that petitioners acted
with the requisite fraudulent intent, and that their
underpayments of tax for 1988 and Mr. Del Bosque’s underpayment
of tax for 1989 are due to fraud. Accordingly, we sustain
respondent’s determination that petitioners are liable for the
additions to tax for fraud under section 6653(b) for 1988 and
that Mr. Del Bosque is liable for the fraud penalty under section
6663 for 1989.
III. Issue 6–Period of Limitations on Assessment and Collection
Section 6501(a) generally imposes a 3-year period of
limitations on assessment and collection of tax. There is an
exception to this 3-year period in the case of a “false or
fraudulent return with the intent to evade tax”. Sec.
6501(c)(1); Lowy v. Commissioner, 288 F.2d 517, 520 (2d Cir.
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