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(2) The period of limitation for assessment is made 6
years instead of 5 in the case of the omission of 25 percent
of gross income, and a similar rule is applied in the bill
to the estate and gift taxes. However, under the bill this
longer period is not to apply if disclosure of the nature
and amount of omitted items is made on or with the tax
return.
The report goes on to state as follows (id. at A414):
Several changes from existing law have been made in
subsection (e) of this section. In paragraph (1), which
relates to income tax, the existing 5-year rule in the case
of an omission of 25 percent of gross income has been
extended to 6 years. The term gross income as used in this
paragraph has been redefined to mean the total receipts from
the sale of goods or services prior to diminution by the
cost of such sales or services. A further change from
existing law is the provision which states that any amount
as to which adequate information is given on the return will
not be taken into account in determining whether there has
been an omission of 25 percent.
The Finance Committee report is almost identical to the Ways
and Means Committee report. See S. Rept. 83-1622, pp. 143-144,
584 (1954).
In addition, in section 702(c) (no corresponding provision
in prior law) the Congress provided as follows:
SEC. 702. INCOME AND CREDITS OF PARTNER.
* * * * * * *
(c) Gross Income of a Partner.--In any case where it is
necessary to determine the gross income of a partner for
purposes of this title [i.e., title 26, the Internal Revenue
Code], such amount shall include his distributive share of
the gross income of the partnership.
This provision is explained as follows in the Ways and Means
Committee report, H. Rept. 83-1337, supra at 65-66:
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