Fudim: Memorandum Finding of Fact and Opinion
PATE, Special Trial Judge: This case was assigned pursuant to the provisions of section 7443A(b)(3) and Rules 180, 181, and 182.1
Respondent determined deficiencies in petitioners’ Federal income taxes of $661, $3,449, and $3,276 for 1986, 1987, and 1988, respectively. After concessions, the issues for decision are: (1) Whether the statutory period of limitations on assessment and collection for 1986 had expired before respondent issued the notice of deficiency; (2) whether respondent made an improper second examination of petitioner’s books and records and, if so, whether the burden of proof is shifted to respondent; (3) whether respondent improperly assessed a deficiency for 1988; (4) whether petitioners are entitled to deduct losses sustained on the rental of their time share condominiums; and (5) whether petitioners are entitled to research credits for 1986, 1987, and 1988.
Each of the issues in this case is, in its own way, distinct from and yet interrelated with the other issues in the case. In order to effectively deal with the issues presented, we have broken our findings of fact into three parts: (1) Research and development activities; (2) losses on time share condominiums; and (3) procedural matters. The opinion that follows deals with these threee issues in reverse order: (1) Procedural issues; (2) losses on time share condominiums; and (3) research credits.
