Peter M. and Susan L. Hoffman - Page 18

          partnerships’ gross receipts.  Respondent has not shown whether             
          Desert Investments or the other partnerships filed 1990 Federal             
          income tax returns and, if so, the amount of gross receipts                 
          reported therein.  We conclude that respondent has failed to meet           
          his burden of production with respect to establishing the amount            
          of gross income stated on petitioners’ 1990 Federal income tax              
          return.  Respondent has failed to show that the 6-year period of            
          limitations is applicable.  Therefore, the general 3-year period            
          of limitations is applicable.  Sec. 6501(a).                                
               Petitioners’ return was filed on September 10, 1991, and the           
          3-year period of limitations ended on September 10, 1994.  Any              
          amounts assessed, paid, or collected after that date are barred             
          by expiration of the period of limitations.  Sec. 6401(a).  Thus,           
          petitioners’ liability for the tax on the cancellation of                   
          indebtedness income was eliminated when the period of limitations           
          expired before either formal assessment by respondent or payment            
          by petitioners.  Ill. Masonic Home v. Commissioner, 93 T.C. 145             
          (1989); Diamond Gardner Corp. v. Commissioner, 38 T.C. 875                  
          (1962).  Petitioners have no liability for interest or a penalty            
          relating to a tax liability that was eliminated by the expiration           
          of the period of limitations.  Accordingly, respondent’s proposal           

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