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Respondent does not specifically allege4 that Regal omitted
from gross income for the taxable years ending March 31, 1993 and
1994, amounts properly includable that are greater than 25
percent of the amounts stated in the returns under section
6501(e)(1)(A)(i). Regal reported gross income of $379,221 for
the year ending March 31, 1993, and $409,996 for the year ending
March 31, 1994. See Colony, Inc. v. Commissioner, 357 U.S. 28
(1958) (concluding that Congress intended to extend period of
limitations under statutory predecessor to section
6501(e)(1)(A)(i) when gross receipts are understated on return).
Respondent determined Regal omitted gross income of $79,454 from
the return for the tax year ending March 31, 1993. This amount
is not greater than 25 percent of the amount of gross income
stated in the return. Respondent did not determine that Regal
omitted gross income from its return for the tax year ending
March 31, 1994, under section 6501(e)(1)(A) because respondent
denied an NOL carryforward that was not an item omitted from the
return. Sec. 301.6501(e)-1(a)(1)(ii), Proced. & Admin. Regs.
Accordingly, section 6501(e) is not applicable to extend the
periods of limitations for either of the tax years ending March
31, 1993 or 1994.
4 The Court permitted petitioners to raise the bar of the
statute of limitations at trial and further permitted respondent
to make general affirmative allegations as to the basis for the
exceptions to the normal 3-year period of limitations under sec.
6501(a).
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