Capital gain, not amount realized, determines application of 6 year collection statute
On Thursday, the Tax Court held that gross income for purposes of Sec. 6501(e) statute of limitation calculations includes only the gain from the sale of investments and not the amount realized from their sale (Barkett, 143 T.C. No. 6 (8/28/14)). The court distinguished its holding from the Supreme Court’s Sec. 6501(e) decision in Home Concrete & Supply, LLC, 132 S. Ct. 1836 (2012).
Under Sec. 6501(a), the IRS must issue a notice of deficiency within three years after a taxpayer files his or her return. A six-year period applies under Sec. 6501(e) if the taxpayer omits from their returns gross income exceeding 25% of the gross income they reported. Read more on the Journal of Accountancy.