Extended Limitations Period

Under IRC Sec. 6501(e)(1), the statute of limitations for assessing tax is extended to six years when the taxpayer omits gross income in an amount exceeding 25% of the gross income reported on the tax return.

 

 

Disagreeing with recent court cases holding, outside of the trade or business context, that an omission does not result from an overstatement of basis, final Reg. 301.6501(e)-1 (found in TD 9511) clarifies that a basis overstatement outside of a trade or business that leads to an understatement of gross income constitutes an omission from gross income under IRC Sec. 6501(e)(1)(A).