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negligence or disregard with respect to the portion of the
underpayment attributable to disallowance of the $3,000 capital
loss claimed by petitioners for 1996. We conclude that
respondent has met the section 7491(c) burden of production as to
this matter. The evidence adduced in these cases reveals a
complete absence of adequate records and substantiation for the
reported loss. With this threshold showing, the burden shifts to
Mr. Richardson to establish that he acted with reasonable cause
and in good faith as to this item.
Petitioners did not mention the capital loss or how it was
derived either at trial or on brief, nor have they offered any
specific arguments directed to the section 6662 penalty. The
Court therefore is unable to offer relief from the determined
amount.
VI. Statute of Limitations
As a general rule, section 6501(a) provides that any tax
must be assessed within 3 years of the date on which the
pertinent tax return was filed. However, an exception exists in
the case of “a false or fraudulent return with the intent to
evade tax”, under which exception tax may be assessed “at any
time.” Sec. 6501(c)(1). The Commissioner bears the burden of
proving fraud in this context as well, but again, it is
sufficient for avoidance of the statue of limitations to
establish only that some portion of the deficiency is due to
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