- 42 -
capital, he did not disclose their receipt to his return preparer
so that adjustments pursuant to this treatment could be made. As
for petitioner’s failure to report more than $200,000 in charter
income that he admits receiving in 1994 and 1995, or a finder’s
fee exceeding $85,000 that he admits receiving in 1995,
petitioner has not even offered an explanation, other than his
general claim of impairment.
We accordingly sustain respondent’s determination of fraud
for 1994, 1995, 1996, and 1997. A taxpayer is liable for a civil
fraud penalty on a deficiency that arises when the taxpayer
carries back a fraudulent loss. Toussaint v. Commissioner, T.C.
Memo. 1984-25. Therefore, it follows from our conclusion
regarding fraud for 1994 that the underpayment in 1991 was also
due to fraud, as the underpayment in 1991 resulted from the
carryback of a fraudulent loss from 1994. The fraud penalty for
1991 is therefore also sustained.24
To reflect the foregoing,
Decisions will be entered
under Rule 155.
24 Our conclusion that the underpayments for 1991, 1994,
1995, 1996, and 1997 were attributable to fraud disposes of
petitioner’s claim that the period of limitations for assessment
of 1991, 1994, 1995, 1996, and 1997 income taxes has expired, see
sec. 6501(c)(1); Badaracco v. Commissioner, 464 U.S. 386, 394-396
(1984), as well as respondent’s allegations in the alternative
that petitioner is liable for accuracy-related penalties under
sec. 6662(a) for the years in issue.
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