Robert E. Wadlow and Connie V. Wadlow - Page 30




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          regulations existing prior to enactment of section 183(e)(4), the           
          taxpayer and Commissioner were required to execute a written                
          agreement extending the period of limitations for assessing                 
          deficiencies and for claiming refunds of overpayments.5  When               
          section 183(e)(4) was enacted in 1976, the legislative history              
          explains the reasons for the law as it existed prior to enactment           
          of section 183(e)(4):                                                       
               The taxpayer, it was believed, should have time to                     
               claim a refund of tax paid by him during the period and                
               the Internal Revenue Service should also have time to                  
               assess any deficiency owed by the taxpayer for any year                
               in the period. [S. Rept. 94-938 (Part I), at 67 (1976),                
               1976-3 C.B. (Vol. 3) 49, 105.]                                         
               Congress was aware that an election under prior law enlarged           
          the period of limitations for deficiencies and refunds.   The               


               5In 1971, when Congress first recognized the need to enlarge           
          the period of limitations in order to accommodate a sec. 183(e)             
          election, Congress envisioned that such an election would be                
          conditional on a general waiver of the statute of limitations as            
          to both deficiencies and overpayments for the election year.                
          Thus, the Senate committee report states:                                   
                    The committee is aware that because of the 5- or                  
               7-year periods involved in the case of the presumption,                
               the statute of limitations may run before any action                   
               could otherwise be taken under the provision added by                  
               the committee.  For this reason, the committee believes                
               that this provision should not generally be applicable                 
               unless the taxpayer executes a waiver of the statute of                
               limitations for the 5- or 7-year period and for a                      
               reasonable time thereafter.  This will allow the                       
               taxpayer time to claim any refunds of tax paid during                  
               this period and also will allow the Internal Revenue                   
               Service to assess any deficiencies.  [S. Rept. 92-437                  
               at 74 (1971), 1972-1 C.B. 559, 600.]                                   




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