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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 from
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