- 20 -
assessment under section 6501(a) applies for their 1998 tax year,
and that the period expired before respondent issued the notice
of deficiency on August 28, 2003.5 Respondent admits that
petitioners filed their 1998 return on April 15, 1999. However,
respondent argues that because petitioners underreported their
income by more than 25 percent of the amount of gross income
stated on their return, the appropriate period of limitations is
6 years, pursuant to section 6501(e). Because we concluded above
that petitioners are not entitled to exclude their income from
IMC in any year as paid under an accountable plan, petitioners
underreported their gross income for 1998 by $21,600.
Petitioners reported gross income of $18,562 on their 1998
return. Twenty-five percent of $18,562 is $4,640.50. Therefore,
the appropriate period of limitations is 6 years under section
6501(e). The period of limitations for assessment of
petitioners’ 1998 taxes did not expire before respondent issued
the notice of deficiency.
VI. Accuracy-Related Penalty
Respondent asserted an accuracy-related penalty under
section 6662(a) for each of petitioners’ taxable years 1996,
1997, 1998, and 1999. Section 6662(a) provides that if section
6662 applies to any “portion of an underpayment of tax required
5Petitioners signed Form 872, Consent to Extend the Time to
Assess Tax, for their taxable years 1996, 1997, and 1999.
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011