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requirement, however, that the parties’ consent or agreement
contain a reference to the applicable statutory provision under
which the assessment period remains open.
Additionally, our holding that petitioner filed a fraudulent
1987 return would also permit the tax for that year to be
assessed at any time. See sec. 6501(c)(1). Therefore, the 1987
assessment period had not expired at the time respondent mailed
the notice of deficiency to petitioner.
Was Petitioner’s Activity a Trade or Business?
Petitioner has admitted that he had unreported income in the
amounts of $154,000 and $50,000 for 1987 and 1988, respectively.
Petitioner’s $125,000 deduction claimed for the 1988 disgorgement
was allowed, but it only affected the $50,000 of the insider
information income earned for 1988, because respondent disallowed
any carryback to the $154,000 earned in 1987.3 Petitioner also
seeks to claim legal expenses of $60,000 and $50,857.43 paid
during 1988 and 1989, respectively. Respondent disallowed those
deductions on the grounds that they were not paid by petitioner
and/or were not incurred in a trade or business.
3 Because of respondent’s allowing $50,000 of the $125,000
disgorgement deduction against the $50,000 of unreported income,
no deficiency was determined for 1988. Because respondent
determined that petitioner was not in a trade or business, no
part of the $75,000 difference that was not deductible in 1988
could be carried to other taxable years.
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