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tax deficiencies for assessment is statutorily limited to a
period ending 3 years after the filing of a taxpayer’s return.
See sec. 6501(a).8 Under section 6501(c)(4), the 3-year period
can be extended by written agreement between the taxpayer and the
Government. The statute of limitations is an affirmative
defense, and the party interposing it must specifically plead it
and carry the burden of showing its applicability. Rule 142;
Adler v. Commissioner, 85 T.C. 535, 540 (1985). Generally,
statutes limiting the assessment and collection of tax are
strictly construed in the Government’s favor. Badaracco v.
Commissioner, 464 U.S. 386, 391 (1984); Tosello v. United States,
210 F.3d 1125 (9th Cir. 2000).
The dispute between the parties has as its focus the term
“return” as it is used in the section 6501(a) phrase “the amount
of * * * tax imposed by this title shall be assessed within 3
years after the return was filed”. In the setting of this case,
the question is whether the “return” referred to is that of the
shareholder or the C corporation.
This Court has consistently held that the relevant “return”
for determining whether the period for assessment expired under
section 6501(a) is that of the taxpayer with respect to whom the
Commissioner seeks to determine a deficiency. See Lardas v.
Commissioner, 99 T.C. 490, 492 (1992) (and cases cited therein).
8 Some of the exceptions to this general rule may be found
in sec. 6501(c) and (e).
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Last modified: May 25, 2011