Timothy and Barbara Kosinski - Page 33




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          Construction in 1997 for the home improvements were addressed to            
          petitioners’ personal residence.  Petitioners shared a joint                
          checking account for personal finances, Mrs. Kosinski’s name was            
          on the account, and she wrote checks on that account.  Even if              
          her husband was responsible for balancing their joint checking              
          account, as Mrs. Kosinski testified, it is implausible that                 
          Mrs. Kosinski was not aware that the expenses for improvements to           
          petitioners’ home were paid out of T.J. Construction’s bank                 
          account and not from petitioners’ personal account.                         
               We do not believe Mrs. Kosinski’s implausible testimony and            
          conclude that she was an active participant in a fraudulent                 
          scheme to understate petitioners’ income and tax liability.  She            
          has not met the requirement of section 6015(b)(1)(C), nor has she           
          established, pursuant to section 6015(b)(1)(D), that it would be            
          inequitable to hold her liable for the deficiency in petitioners’           
          tax for 1997.                                                               
          Statute of Limitations                                                      
               As a general rule, section 6501 provides that any tax must             
          be assessed within 3 years of the date on which the pertinent tax           
          return was filed.  Sec. 6501(a).  However, an exception exists in           
          the case of a “false or fraudulent return”, under which exception           
          tax may be assessed at any time.  Sec. 6501(c)(1).  Respondent              
          bears the burden of proving fraud in this context.  Sec. 7454(a);           
          Rule 142(b).  Because respondent has done so here for the reasons           







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