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Commissioner has prepared a substitute return and issued a notice
of deficiency. Blenheim Co. v. Commissioner, supra; Taylor Sec.,
Inc. v. Commissioner, supra.
In this case we decide whether a nonresident alien
individual may avoid the sanctions of section 874(a) by filing
returns after the Commissioner has prepared substitute returns
for him, but before the notice of deficiency is issued.
Petitioner first argues that, since there is no explicit terminal
date in the statute, a taxpayer may file delinquent returns at
any time and avoid the proscription of section 874(a). In the
alternative, petitioner contends that if there is a terminal date
that date should be the issuance of the notice of deficiency, and
not the filing of the return prepared by the Commissioner.
Where, as here, the Commissioner has notified the taxpayer that
he has not filed a return and has given the taxpayer a reasonable
time within which to file a return, we disagree with both
arguments.
As we have already discussed, while sections 874(a) and
882(c)(2) contain no explicit time limit, the policy behind these
provisions, as applied by the case law, dictates that there is a
cut-off point or terminal date after which it is too late to
submit a tax return and claim the benefit of deductions. If no
cut-off point existed, taxpayers would have an indefinite time to
file a return, and these provisions would be rendered
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