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OPINION
I. Evidentiary Matter
After briefs were filed in these cases, petitioners filed a
motion requesting judicial notice pursuant to rule 201 of the
Federal Rules of Evidence (hereinafter Fed. R. Evid. 201). The
motion recites: “In the Ninth Circuit’s decision in United
States v. Smith, 424 F.3d 992, 1010 (9th Cir. September 13,
2005), the IRS conceded that in some situations, the business
trust could report income on its Form 1041 but could
alternatively, report the income on the individual’s Form 1040 as
long as it was reported.” Petitioners then quote two phrases
from the referenced case and attach a copy of the complete
opinion. The phrases are taken from the following two
paragraphs, set forth in full with the quoted language emphasized
by boldface type:
Smith argues that the particular 1040 personal
returns or 1065 partnership tax returns were not false
for omitting income or revenue that should have been
reported on a separate 1041 trust return. However, IRS
Agent Brown testified that although revenue in a
business trust such as a UBO would typically be
reported on a form 1041, as a default the income could
also be reported on a 1040 personal income tax return.
In any event, the income had to be reported on some IRS
form. Thus, the under-reporting of income on the
clients’ personal returns, that could have been but was
not reported elsewhere, made the personal returns
“false” or “fraudulent.”
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