Arthur C. Brincat - Page 10




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          that:  The issue as to ownership of the funds is identical, the              
          holding of the California courts are final, petitioners were                 
          parties in one proceeding and found to be in privity with Victor             
          in the earlier proceeding, the issues here were necessarily                  
          litigated by petitioners in the State court proceeding(s), and               
          there has been no change in the facts or law.                                
               We note that petitioners were ordered by the California                 
          courts to return the $272,100 but they have not done so, and they            
          do not argue here that they are compelled to do so.  Accordingly,            
          we hold that, for 1989, Arthur’s and Edgar’s receipt of $136,550             
          and $135,550, respectively, is income to them and does not                   
          constitute nontaxable inheritances from their father.                        
          Did the Period for Assessment Expire Before Respondent’s Issuance            
          of the Notice of Deficiency to Edgar?                                        
               Edgar contends that the period for assessment had expired               
          before respondent’s August 27, 1998, mailing of the notice of                
          deficiency for Edgar’s 1989 taxable year.  Edgar executed                    
          consents beginning on September 5, 1996, and again on May 20,                
          1997, which, if effective, would have extended the period for                
          assessment to December 31, 1998.  The normal 3-year period for               
          assessment under section 6501(a), however, would have expired on             
          October 15, 1993, before the execution of the first consent to               
          extend the statutory period.                                                 
               Respondent contends that the 3-year assessment period is not            
          applicable because Edgar omitted more than 25 percent of gross               





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