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Commissioner, 77 T.C. 582, 598 (1981). The Chens did not do this
and so cannot offset their 1998 gross income with a business bad
debt deduction.
Conclusion
We reject each of the Chens’ arguments. Because of the
fraud involved, the IRS has no time limit for assessing the
unpaid tax, so the statute of limitations had not passed.
Unreported income of $272,963 was omitted from the Chens’ 1998
return. The Chens are liable for the fraud penalty due to their
intentional failure to report the insurance proceeds. And
finally, Mrs. Chen does not qualify for innocent spouse relief.
To reflect the Commissioner’s concession, however,
Decision will be entered under
Rule 155.
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Last modified: May 25, 2011