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Petitioners cite respondent’s repeated audits on the same
issue in 1990, 1992, and 1993, respondent’s concessions in those
audits, and the tax auditor’s letter advising petitioners to
attach the stipulated Tax Court decision to their future returns
as evidence of affirmative misconduct.25 However, respondent’s
prior audits and concessions alone do not constitute affirmative
misconduct, see Frische v. Commissioner, T.C. Memo. 2000-237, and
while petitioners may have relied on the tax auditor’s letter,
that representation does not rise to the level of affirmative
misconduct. Petitioners point to no other instances of alleged
misconduct on the part of respondent that would justify
application of the doctrine of equitable estoppel, and we find
nothing in the record which demonstrates respondent engaged in
any affirmative misconduct.
There is no serious injustice in requiring petitioners to
include in gross income amounts which are not properly excluded
under section 104(a)(2) with respect to a taxable year that was
not previously at issue and which was not the subject of any
representations by respondent. The evidence that petitioners
25Petitioners rely on certain language contained in
Willamette Valley Lumber Co. v. United States, 252 F. Supp. 199,
205 (D. Or. 1966), and argue that “where the Commissioner
repeatedly audits a taxpayer’s returns for several years and
repeatedly accepts how a certain transaction has been reported,
it may be estopped from arguing to the contrary in a subsequent
year.” We are not bound by the District Court opinion, and we
decline to adopt petitioners’ argument as the law to be applied
in this case.
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