Shahram Kohan & Yonina Kohan v. Commissioner

T.C. Memo. 2019-85 UNITED STATES TAX COURT SHAHRAM KOHAN AND YONINA KOHAN, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 18830-17. Filed July 9, 2019. Richard S. Kestenbaum, for petitioners. James P.A. Caligure and Monica E. Koch, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION LAUBER, Judge: The Internal Revenue Service (IRS or respondent) deter- mined deficiencies in Federal income tax and penalties for petitioners’ 2008 and 2009 tax years. For petitioner husband, the IRS determined deficiencies, fraud -2- [*2] penalties under section 6663, and alternative accuracy-related penalties under section 6662(a) as follows:1 Penalties Year Deficiency Sec. 6663 Sec. 6662(a) 2008 $114,184 $85,638 $22,837 2009 119,705 89,665 23,941 The IRS issued a separate notice of deficiency to petitioner wife, determining the same deficiencies but only accuracy-related penalties. Petitioners have conceded the deficiencies, so the question we must decide is whether petitioner husband, for each year at issue, is liable for fraud. Petitioners contend that assessment of the amounts shown above is barred by the three-year period of limitations in section 6501(a). Because we find that the underpayments were due to fraud, there is no period of limitations, and the tax for 2008 and 2009 “may be assessed * * * at any time.” Sec. 6501(c)(1). We will accordingly sustain the deficiencies and fraud penalties determined by respondent. 1 All statutory references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. We round all dollar amounts to the nearest dollar. -3- [*3] FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulations of facts and the attached exhibits are incorporated by this reference. Petitioners re- sided in New York when they filed their petition. A. The Dental Practice Petitioner husband (Dr. Kohan) was born in Iran and immigrated to the Uni- ted States. He attended Yeshiva University in New York and dental school at New York University. After dental school he joined the practice of another dentist, Dr. Magid, in Flushing, New York. Two years later, in 2001, Dr. Kohan acquired Dr. Magid’s practice as well as the building in which the practice was conducted. Although Dr. Kohan’s bro- ther was listed as the purchaser on the title certificate for the property, his brother appears to have acted as a nominee. Dr. Kohan paid no rent to his brother, made all mortgage payments on the dental office building, and defrayed the expenses of maintaining it. The dental office building included a residential portion that was occupied by one or more tenants. At no time after 2001 did Dr. Kohan or his brother report rental income from these tenants. Dr. Kohan testified that he allowed the tenants -4- [*4] to live in the building rent free because they were “taking care of the property and watching it.” We did not find this testimony credible. From 2001 to the present Dr. Kohan conducted his dental practice from this ...

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