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For 1986, petitioner knew and had reason to know of the
underpayment due to his and Betsy’s failure to report Betsy’s
constructive dividends; it would not be inequitable to hold
petitioner liable for this underpayment.
OPINION
I. Statute of Limitations
Petitioner has properly raised in his petition the
affirmative defense of the statute of limitations under section
6501(a). Rule 39.
In general, section 650121 bars assessment of an income tax
deficiency more than 3 years after the later of (1) the date the
tax return was filed, or (2) the due date of the tax return. If
21 Sec. 6501 provides, in pertinent part, as follows:
Sec. 6501. LIMITATIONS ON ASSESSMENT AND COLLECTION.
(a) General Rule.--Except as otherwise provided in this
section, the amount of any tax imposed by this title [title
26, the Internal Revenue Code] shall be assessed within 3
years after the return was filed (whether or not such return
was filed on or after the date prescribed) * * * and no
proceeding in court without assessment for the collection of
such tax shall be begun after the expiration of such period.
(b) Time Return Deemed Filed.--
(1) Early return.--For purposes of this section, a
return of tax imposed by this title, * * * filed before
the last day prescribed by law or by regulations
promulgated pursuant to law for the filing thereof,
shall be considered as filed on such last day.
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