Harvey L. Hoover - Page 24

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          conclude that petitioner has placed the deficiency for the year             
          1989 in dispute by raising the statute of limitations.                      
               Section 6501(a) generally provides that “the amount of any             
          tax imposed by this title shall be assessed within 3 years after            
          the return was filed”.  The only apparent exception that might              
          apply here is that contained in section 6501(c).13  Section                 
          6501(c)(1) provides an exception to the general 3-year period of            
          limitations:  “In the case of a false or fraudulent return with             
          the intent to evade tax, the tax may be assessed, or a proceeding           
          in court for collection of such tax may be begun without                    
          assessment, at any time.”  Respondent bears the burden of proving           
          by clear and convincing evidence that petitioner filed a false or           
          fraudulent tax return.  Sec. 7454(a); Rule 142(b).  Respondent              
          makes no argument that he has proven fraud or that any other                
          exception applies with respect to petitioner’s 1989 liability.              
          Respondent failed to offer evidence relating to petitioner’s 1989           
          tax liability.  The canceled checks, invoices, receipts, and                
          testimony from the criminal proceeding that were admitted into              
          evidence primarily relate to petitioner’s 1990, 1991, and 1992              
          tax years.  Since respondent failed to offer evidence of fraud              

               13 Sec. 6501(e) extends the period of limitations to 6 years           
          when the taxpayer omits amounts properly includable in gross                
          income and the omitted amounts exceed 25 percent of the reported            
          gross income.  Sec. 6501(e) does not apply here because                     
          respondent issued the notice of deficiency on Aug. 20, 1999,                
          which is more than 6 years after petitioner timely filed his 1989           
          income tax return.                                                          

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