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Under section 183(e)(4), if a taxpayer elects a
postponement, the statutory period for the assessment of any
deficiency attributable to the activity is extended to 2 years
after the due date (without extensions) for filing the return for
the last taxable year in the 5- or 7-year period to which the
election relates. As noted previously, petitioners made valid
elections to postpone a determination as to their 1990, 1991,
1992, and 1993 horse activities by attaching properly executed
Forms 5213 to their returns for those years.
The Form 5213 attached to petitioners' 1990 return states
that 1989 was the first tax year in which petitioners engaged in
their horse activity. Thus, under section 183(e)(4), the period
of limitations for assessment under the election was extended to
April 15, 1998--2 years after the due date (without any
extension) for filing petitioners' 1995 return.
Section 6511(c) provides special rules in cases of extension
of time by agreement. Under section 6511(c)(1), the time for
filing a claim for credit or refund does not expire prior to 6
months after the expiration of the period within which an
assessment may be made pursuant to an agreement or any extension
thereof under section 6501(c)(4). That section provides for an
extension of time for assessment by agreement in writing signed
by both the Secretary and the taxpayer, if done before the
expiration of the time prescribed in section 6501.
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Last modified: May 25, 2011