Statute of limitations.

• Author: Josephs Stuart R.
• Position: FED TAX NEWS - Brief article

A six-year statute of limitations applies for income taxes if the taxpayer omits from gross income an amount exceeding 25 percent of the gross income reported in the return.

Regs. Sec. 301.6501(e)-1(a)(1)(iii) provides that gross income generally means only the gains realized from the disposition of investment property. It further provides that, generally, an understated amount of gross income resulting from an overstatement of unrecovered cost or other basis constitutes an omission from gross income.

The Supreme Court invalidated this latter provision April 25, 2012, in Regs. Sec...