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that petitioner had the specific intent to evade taxes with
respect to the money he obtained from the Kieffers.
Accordingly, we hold that respondent has not carried his burden
of proving fraud by clear and convincing evidence.
II. Period for Assessment
Because we hold that petitioner is not liable for the fraud
penalty, the exception of section 6501(c)(1) (permitting tax to
be assessed at any time in the case of a false or fraudulent
return with the intent to evade) is inapplicable. At trial,
respondent conceded that the exception of section 6501(e) is
also inapplicable for 1995 because the $9,500 of gross income
petitioner omitted from his 1995 return is less than 25 percent
of the $61,725 of gross income he reported. Respondent has not
established that any other exception to the general 3-year
limitation period applies for 1995. Accordingly, respondent is
time barred from assessing petitioner’s 1995 taxes.
Petitioner has not pleaded or argued the statute of
limitations with respect to respondent’s assessment of his 1996
taxes; we deem petitioner to have conceded any such issue. In
any event, the exception of section 6501(e) is applicable,
inasmuch as the amount of income petitioner omitted exceeded 25
percent (in fact, over 100 percent) of the gross income stated
on his 1996 return. Accordingly, respondent is not time barred
from assessing petitioner’s 1996 taxes.
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