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We must decide the following issues for each of the years in
issue:1
Whether petitioners understated their gross income by
omitting certain items reported by petitioners on returns made by
them for two trusts: Complete Connections Trust and J&R Trust.2
Whether petitioners are liable for self-employment taxes
(and are entitled to related deductions) on account of each’s
share of the trust items respondent determined petitioners
omitted from gross income.3
1 In their reply brief, petitioners state: “The statute of
limitations has expired for the years in question. Respondent
has failed to provide the petitioner any facts or evidence
showing where the statute of limitation has been extended for any
of the tax years in question.” In pertinent part, Rule 39
provides that a party shall set forth in the party’s pleading any
matter constituting an affirmative defense, “including * * * the
statute of limitations”. The petition does not raise any issue
with respect to the statute of limitations, and we cannot
conclude that such issue was tried by consent. See Rule 41(b).
The affirmative defense of statute of limitations is not before
the Court. In any event, it appears that sec. 6501 would not
limit the assessment or collection of any of the tax liabilities
here in issue. See sec. 6501(a), (e)(1).
2 In naming, describing, or referring to Complete
Connections Trust and J&R Trust, we use the term “trust” for
convenience, without intending a finding that, in either case, a
trust relationship did, in fact, exist.
3 The amount of petitioners’ liability for self-employment
taxes and the amount of the deductions under sec. 164(f) to which
petitioners are entitled are computational matters, the
resolution of which will depend upon our disposition of the gross
income issue. Petitioners have not separately challenged such
liability and deduction, and we do not further discuss those
items.
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Last modified: May 25, 2011