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March 31, 1992 and 1993, respectively. Those amounts were not
reported on the returns for those years. We are also satisfied
that Mr. Coyle ultimately received the amounts paid to Regal for
the wheels and axles. Accordingly, Regal is entitled to
deductions for commissions paid as determined by respondent, as
discussed below, for the tax years ending March 31, 1992 and
1993, of $13,948, and $45,741, respectively.
While there is no doubt that Regal omitted gross receipts,
the corresponding deductions for commissions paid result in no
underpayments of tax with respect to sales of wheels and axles.
However, the underpayments of tax and the deficiencies respondent
determined for the years in issue are based on adjustments of
other items including: (1) A disallowed deduction for claimed
bad debts; (2) a disallowed deduction for State sales tax; and
(3) omitted income from volume rebates. Regal did not present
any evidence that would suggest that respondent’s determinations
were not correct as to these items.
On the basis of respondent’s determination and Regal’s
failure to present evidence to establish that the determination
is not correct, we would normally sustain the determination as to
these items. However, since respondent relies on (1) fraud under
sections 6663 and 6501(c)(1), and (2) substantial omission under
section 6501(e) as affirmative defenses to the running of the
period of limitations, we withhold any further consideration of
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