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for 1995 and 1996.7 The parties have resolved their differences
with respect to various other items of income, deductions,
credits, and penalties with respect to the 1995, 1996, and 1997
taxable years.
Discussion
1. Period of Limitations Under Section 6501(e)(1)(A)
Petitioners argue that respondent is barred from assessing
deficiencies for 1995 and 1996 because the notice of deficiency
was mailed more than 3 years from the dates the returns for those
years were filed. See sec. 6501(a). Respondent contends that
petitioners omitted gross income in excess of 25 percent of the
amounts stated in their returns, and therefore he is entitled
under section 6501(e)(1)(A) to assess the deficiencies any time
within 6 years after the 1995 and 1996 returns were filed.
Petitioners answer that the gross income omitted from their
individual returns is disregarded in determining whether the
omitted amount exceeded 25 percent of the gross income reported
in their returns, because the omitted income was adequately
7 The parties have stipulated that petitioners earned or
received, but did not report on their individual returns, income
totaling $61,272 and $84,723 in 1995 and 1996, respectively.
However, in handwritten amendments to the stipulations,
respondent appears to concede that the foregoing figures should
be offset by the business income of $5,000 and $12,136 that
petitioners reported on Schedules C in their 1995 and 1996
returns, respectively. In finding the figures listed in the
text, we have resolved this ambiguity in petitioners’ favor. In
any event, these discrepancies have no impact on the issues
remaining for resolution.
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