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desires to change the representation previously made in a later
year after the statute of limitations bars adjustments for the
earlier year. E.g., Herrington v. Commissioner, supra at 758;
Shook v. United States, supra at 667; Beltzer v. United States,
supra at 212; Estate of Letts v. Commissioner, supra at 297;
Cluck v. Commissioner, supra at 332; LeFever v. Commissioner,
supra at 543; Janis v. Commissioner, supra.
Turning to the case at bar, the Court first considers
whether petitioners have in their tax reporting made a pertinent
representation of fact. In this connection, “a taxpayer’s
treatment of an item on a return can be a representation that
facts exist which are consistent with how the taxpayer reports
the item on the return.” Estate of Letts v. Commissioner, supra
at 299-300. Throughout this proceeding, petitioners have
maintained that, from the time the E Trade account was
established in 1998, Mr. Arberg conducted all trading activity
taking place therein. Nonetheless, on her separate tax return
for 1999, Ms. Quinn reported proceeds from transactions in the E
Trade account as capital gain. Conversely, on his separate tax
return for 1999, Mr. Arberg did not report any proceeds from
transactions in the E Trade account, whether as ordinary income
or otherwise.
The above-described reporting constitutes a representation
that Ms. Quinn is the owner of the E Trade account, that gains
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