Mark Allison Responds to D.C. Circuit's Decision to Uphold Extended Limitations Period for Tax Returns Containing Overstated Basis Items

Tax Analysts
Excerpt taken from article.

The IRS added to its growing tally of judicial wins in the long-running fight over an extended statute of limitations period for tax returns containing overstated basis items, with the U.S. Court of Appeals for the District of Columbia issuing an opinion June 21 that reverses the Tax Court and holds that basis overstatement constitutes omission from gross income.

Mark D. Allison of Caplin & Drysdale told Tax Analysts that "the decisions further drive a wedge in the circuit split on the overstatement of basis issue and will no doubt give the IRS additional confidence in their use of retroactive-type regulations to bolster its litigation tactics." The regulations seem unclear as to whether they really changed the definition of gross income or the phrase "omission from gross income," which "makes a potentially significant difference in the impact and interpretation of the regulations," he said.

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