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United States v. Home Concrete & Supply, LLC - 566 U.S. 478, 132 S. Ct. 1836 (2012)


Overstatements of basis, and the resulting understatement of gross income, do not trigger the extended limitations period of 26 U.S.C.S. § 6501(e)(1)(A) for tax assessments.


Ordinarily, the Government must assess a deficiency against a taxpayer within “3 years after the return was filed,” 26 U. S. C. § 6501(a), but that period is extended to 6 years when a taxpayer “omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return,” § 6501(e)(1)(A). Respondent corporate taxpayer, Home Concrete & Supply, LLC, overstated the basis of certain property that they had sold. As a result, their returns understated the gross income they received from the sale by an amount in excess of 25%. The Tax Commissioner asserted that the deficiency was outside the 3-year limitations period but within the 6-year period. The Court of Appeals for the Fourth Circuit concluded that the corporate taxpayer's overstatements of basis, and resulting understatements of gross income, did not trigger the extended limitations period. The United States Supreme Court granted the Government's petition for certiorari review.


Did the extended 6-year period allowed by 26 U.S.C.S. § 6501(e)(1)(A), for assessment of additional income tax when the corporate taxpayer omitted from gross income properly includible amount exceeding 25 percent of gross income stated in tax return apply to understatement of basis in property sold?




The U.S. Supreme Court held that, in accordance with previous Court precedent involving a prior but materially indistinguishable version of the statute, the extended assessment period did not apply since the overstatement of basis was not an amount omitted from gross income. The precedent established that the scope of the extended period was limited to situations in which specific receipts were left out of the computation of gross income, which did not include overstatements of basis, and there was no basis for overruling the precedent. Further, a recently promulgated agency regulation equating an overstatement of unrecovered cost or other basis with an omission from gross income was not entitled to deference based on ambiguity in the statute, since the precedent already interpreted the statute and there was thus no longer any different interpretation which was consistent with the precedent and available for adoption by the government.

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