                          T.C. Memo. 2000-301



                        UNITED STATES TAX COURT



        WILLIAM T. HOUGH AND NORMA HOUGH, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10661-97.                 Filed September 25, 2000.

     William T. Hough, pro se.

     Anthony Ammirato, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     SWIFT, Judge:   Respondent determined deficiencies in

petitioners' joint Federal income taxes and accuracy-related

penalties as follows:




                                      Accuracy-Related Penalty
          Year       Deficiency             Sec. 6662(a)

          1992          $38,950                 $7,790
          1993           23,134                  4,627
          1994           38,045                  7,609
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     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     Petitioners failed to participate in the stipulation

process, and petitioners failed to appear at trial.   Due,

however, to concern over placement on respondent of the burden of

proof with regard to a statute of limitations issue, respondent

did not move for dismissal, and respondent offered evidence

regarding petitioners’ extension of the period of limitations.

The primary issue for decision is whether petitioners executed a

valid consent to extend the time to assess tax with regard to

1992.


                        FINDINGS OF FACT

     At the time the petition was filed, petitioners resided in

Basking Ridge, New Jersey.

     Petitioners filed their 1992 and 1993 joint Federal income

tax returns respectively on April 15, 1993, and on or after

April 18, 1994.

     In early August of 1995, because respondent’s audit of

petitioners had not been completed, respondent requested

petitioners to sign a Form 872, Consent to Extend the Time to

Assess Tax, that would extend the period for assessment of tax

for 1992 to April 15, 1997.   Respondent mailed the Form 872 to
                                - 3 -

petitioners for petitioners’ signature, and respondent received

the Form 872 back from petitioners on which petitioners’ names

were signed on the signature lines.      On August 29, 1995,

respondent’s representative signed the Form 872.

     On April 14, 1997, respondent mailed by certified mail the

notice of deficiency to petitioners for 1992, 1993, and 1994 in

which the tax deficiencies and accuracy-related penalties at

issue in this case were determined.


                               OPINION

     Income taxes generally must “be assessed within 3 years

after the return was filed”.   Sec. 6501(a).     Taxpayers and

respondent, however, may consent in writing to extend the 3-year

period of limitations on assessment.      See sec. 6501(c)(4).

     Petitioners allege that respondent’s notice of deficiency

mailed on April 14, 1997, was not timely as to the tax

deficiencies determined by respondent against petitioners for

1992 and 1993.

     Generally, where taxpayers plead the defense of a lapse of

the period of limitations, and where prima facie evidence

supports the taxpayers’ defense, respondent has the burden of

introducing evidence to show that the notice of deficiency was

timely mailed to the taxpayers.   See Adler v. Commissioner, 85

T.C. 535, 540 (1985); Leatherman v. Commissioner, T.C. Memo.

1989-650.
                               - 4 -

     In determining the validity of a consent to an extension of

the period of limitations, contract principles are important, and

we look to objective manifestations of mutual assent to determine

the existence of such an agreement.    See sec. 6501(c)(4);

Schulman v. Commissioner, 93 T.C. 623, 639 (1989); Piarulle v.

Commissioner, 80 T.C. 1035, 1042 (1983).

     In this case, respondent has adequately demonstrated that

the assessment periods of limitations for both 1992 and 1993 were

open at the time respondent mailed the notice of deficiency to

petitioners.   For 1992, the credible evidence indicates that

petitioners signed the Form 872 on which the period of limitation

for 1992 was extended to April 15, 1997.    This Form 872 was

mailed to petitioners and returned to respondent signed with

petitioners’ names.   Petitioners do not deny that the signatures

thereon constitute their signatures.

     For 1993, respondent’s notice of deficiency was obviously

timely, having been mailed to petitioners on April 14, 1997, a

number of days before expiration of the period of limitations for

1993.

     We conclude that respondent’s notice of deficiency to

petitioners was timely as to both 1992 and 1993.

     With regard to the underlying tax deficiencies and the

accuracy-related penalties determined by respondent against

petitioners for 1992, 1993, and 1994, we find for respondent, and
                               - 5 -

we sustain respondent’s determinations against petitioners for

lack of evidence.   See Rule 149.

     To reflect the foregoing and due to a concession of one

issue by respondent,


                                            Decision will be entered

                                       under Rule 155.
