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promises, all through use of the mails, in violation of 18 U.S.C.
section 1341.
Petitioner’s Federal Tax Returns
For taxable years 1995 and 1996, petitioner timely filed
self-prepared Forms 1040, U.S. Individual Income Tax Return.
Petitioner reported gross income of $61,725 and $61,406 on his
1995 and 1996 tax returns, respectively. He reported none of the
payments he had received from the Kieffers.
Notice of Deficiency
On April 9, 2003, respondent mailed to petitioner a notice
of deficiency for 1995 and 1996, determining that petitioner had
unreported income of $9,500 for 1995 and $65,000 for 1996 and was
liable for the civil fraud penalty for both years.3
OPINION
At trial, petitioner conceded that he had unreported taxable
income with respect to the Kieffers’ cash payments to him in 1995
and 1996.4 Consequently, the primary issue remaining for
decision is whether petitioner is liable for the section 6663(a)
civil fraud penalty.
3 In the notice of deficiency, respondent also disallowed
itemized deductions that petitioner had claimed for unreimbursed
employee expenses. Before trial, the parties settled this issue,
agreeing that petitioner had substantiated stipulated amounts of
expenses, which for 1995 exceeded the expenses claimed on his
return.
4 Similarly, the parties have stipulated that the Kieffers’
payments to petitioner were “income” to him.
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Last modified: May 25, 2011