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have not shown that they paid House of Babes' taxes for 1984 and
1985.
We conclude that Wiltzius' plea agreement does not eliminate
his liability as a transferee.
D. Whether the Statute of Limitations Bars Respondent from
Assessing Transferee Tax Liability
Petitioners contend that the statututory period of
limitations bars respondent from assessing transferee tax
liability against them. We disagree.
The Commissioner may assess liability of an initial
transferee within 1 year after the period to assess tax against
the transferor expires. Sec. 6901(c)(1). Tax may be assessed at
any time if the return is false or fraudulent. Sec. 6501(c)(1).
Respondent determined that House of Babes filed false returns for
1984 and 1985 and that the addition to tax for fraud applied.
House of Babes' 1984 and 1985 returns were fraudulent because it
intentionally did not report about 50 percent of the weekday
gross receipts. Thus, there is no time limit for respondent to
determine a deficiency against House of Babes or its transferees.
Sec. 6501(c)(1); Pert v. Commissioner, 105 T.C. 370, 378-379
(1995).
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