SCOTUS has ruled in UNITED STATES v. HOME CONCRETE & SUPPLY, LLC, et al. (11-139) that an overstatement of basis is not an omission of gross income for purposes of allowing the IRS to issue an assessment after the three-year period has run.
Well, how about that.
I suppose if a majority of Congress disagrees they can change the definition of gross income in a way the reverses the Supremes.
Why bother? They can change the statute of limitation to reflect "any incorrect entry which results in an understated tax due of greater than $XX." Messing around with basis can easily be a huge tax evasive result. I'm surprised as anyone over this. 3 years? It's possible to have a situation that the understatement has no impact in the first few years after the bad-basis return. Just large carry-forwards.
Seems to me that they are saying that understating income is one thing, but overstating deductions is entirely another.
___ Stu
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