Eric B. Benson, et al. - Page 5

                                        - 5 -                                         
               Section 6501(a)4 provides that the Commissioner shall assess           
          any tax due within 3 years after the taxpayer files a return.               
          Section 6501(e)(1)(A)5 provides an exception to the general 3-              

               4 Specifically, sec. 6501(a) provides:                                 
               the amount of any tax imposed by this title shall be                   
               assessed within 3 years after the return was filed                     
               (whether or not such return was filed on or after the                  
               date prescribed) * * * and no proceeding in court                      
               without assessment for the collection of such tax shall                
               be begun after the expiration of such period.                          

               5 Sec. 6501(e) provides in pertinent part:                             
                    SEC. 6501(e).  Substantial Omission of Items.--                   
               Except as otherwise provided in subsection (c)--                       
                         (1) Income taxes.--In the case of any tax                    
                    imposed by subtitle A--                                           
                              (A) General rule.--If the taxpayer omits                
                         from gross income an amount properly                         
                         includible therein which is in excess of 25                  
                         percent of the amount of gross income stated                 
                         in the return, the tax may be assessed, or a                 
                         proceeding in court for the collection of                    
                         such tax may be begun without assessment, at                 
                         any time within 6 years after the return was                 
                         filed.  For purposes of this subparagraph--                  
                                   (i) In the case of a trade or                      
                              business, the term “gross income” means                 
                              the total of the amounts received or                    
                              accrued from the sale of goods or                       
                              services (if such amounts are required                  
                              to be shown on the return) prior to                     
                              diminution by the cost of such sales or                 
                              services; and                                           
                                   (ii) In determining the amount                     
                              omitted from gross income, there shall                  
                              not be taken into account any amount                    

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Last modified: May 25, 2011