You say omit, I say understate.

Journal of Accountancy, September, 2007 by Reichert, Charles J.

The Tax Court recently held that an understatement of gain by a partnership due to overstating its basis on a section 754 election did not result in an omission of gross income. Thus a proposed gain adjustment by the IRS was not timely, since it occurred after the expiration of the normal three-year statute of limitations period. The extended six-year limitations period of IRC [section][section] 6501(e)(1)(a) and 6229(c)(2) did not apply because there was no substantial omission of gross income, the court said.

Generally, the IRS must assess additional tax within three years of the later of the due date of the return or the date of its filing. A substantial omission of gross income--defined as exceeding 25% of reported gross income--extends the period to six...

Read the rest of this article with a Free Trial at HighBeam Research.

Premium Content Partnership | HighBeam Research provides an in-depth online archive library of reference works.