- 12 - admitted that he is unsure of the exact dates when "loans" were made and how much of the "loan" proceeds he deposited in his personal and business bank accounts. We find no probative evidence that any of the deposits were loans. We are persuaded that the record supports respondent's computation of petitioners' income for each of the 3 years involved, based on the bank deposits. B. Period of Limitation Respondent admits that the 3-year period of section 6501(a) has expired with respect to assessing tax for petitioners' 1988 taxable year. Respondent argues, however, that the 6-year period of limitation of section 6501(e)(1) applies because petitioners' 1988 tax return omitted more than 25 percent of their gross income for that year. Petitioners argue that respondent has failed to show that they underreported their income by more than 25 percent because respondent's bank deposits analysis does not meet her burden of proof. We agree with respondent. Generally, the period of limitation for assessment of tax is 3 years from the date a taxpayer's return is filed. Sec. 6501(a). If, however, a taxpayer omits from gross income an amount in excess of 25 percent of the gross income reported on his or her tax return, the statutory period for assessment is extended to 6 years. Sec. 6501(e)(1)(A). For the 6-year period to apply, respondent must prove by a preponderance of the evidence that: (1) Petitioners omitted fromPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011