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Hence, because we also hold that the Federal limitations period
is applicable in this case, transferee liability may properly be
asserted against petitioner.
III. Application
A. Period of Limitations
As a threshold procedural matter, we first focus on the
question of whether the State period of limitations prevails over
the Federal so as to bar respondent’s assertion of transferee
liability and to eliminate any need for further consideration of
the related substantive issues.
Respondent contends that because Mr. Espinosa filed his
returns with respect to 1981, 1982, 1984, and 1985 on November 3,
1993, the period of limitations for assessment of transferee
liability against petitioner extended to November 3, 1997.
Hence, the notice of transferee liability sent on July 17, 1997,
was timely. Petitioner, in contrast, argues that the provisions
set forth in the California Civil Code for extinguishment 4 years
after the date of transfer should control. According to
petitioner, since the notice of transferee liability was not sent
until nearly 7 years after the July 31, 1990, transfer,
respondent’s right to pursue any such liability on the basis of a
fraudulent conveyance under California law has been extinguished.
This precise issue was, however, decided unfavorably to
petitioner’s position in Bresson v. Commissioner, 111 T.C. 172
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