In Uncategorized on 04/26/2012 at 16:59


The United States Supreme Court, an exalted forum far above the Tax Court whence I customarily draw my blogposts, has affirmed Fourth Circuit, holding that overstating basis to minimize gain, even to the extent of gain greater than 25 percent of the amount of gross income stated in the return, does not invoke the six year statute of limitations. The standard three-year obtains, notwithstanding the understatement.

In short, don’t lower the bridge, raise the river.

The case is United States v. Home Concrete & Supply, LLC, No. 11-139, decided 4/25/12.

Harking back to The Colony, Inc. v. United States, 357 U.S. 28 (1958), Justice Breyer refuses to buy IRS’ argument that Reg. §301.6501(e)–1, which was promulgated in final form in December 2010, overturns Colony pursuant to Chevron and Mayo Clinic (see my blogpost “Carpenter, Colony, Chevron and Mayo”, posted 4/26/11).

Nope, says Justice Breyer: “We do not accept this argument. In our view, Colony has already interpreted the statute, and there is no longer any different construction that is consistent with Colony and available for adoption by the agency.”

Of course, this is a 5 to 4, with Justice Kennedy leading the dissenters. So there may be further developments.


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