- 5 -
maintained records for use in tax return preparation.
Petitioners filed separate tax returns for the years in issue, on
which they reported only their respective incomes, without regard
to Louisiana’s usual community property laws.
Respondent determined, among other things, that petitioners’
marriage contract did not stop the application of Louisiana’s
usual community property laws for Federal income tax purposes.
Respondent determined deficiencies and additions to tax (fraud)
against Sandra as a result of charging her with one-half of the
omitted income from Michael’s business.
In the notices of deficiency, respondent’s determinations
against Michael totaled (deficiencies plus fraud penalties)
almost $65,000, and against Sandra totaled (deficiencies plus
fraud penalties) more than $40,000. In the notices of
deficiency, respondent determined that, if the fraud penalty was
not sustained, then the accuracy-related penalty of section
6662(a) applied. In the answer, respondent narrowed this
alternative to the 20-percent negligence accuracy-related
penalty.
Respondent conceded at trial and on brief that, if we held
petitioners’ marriage contract was effective to take petitioners
out of Louisiana’s usual community property matrimonial regime,
then Sandra would have no deficiency and no addition to tax or
penalty for any year in issue. In this event, respondent
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011