Eric B. Benson, et al. - Page 6

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          year period of limitations prescribed by section 6501(a).                   
          Section 6501(e)(1)(A) extends the period of limitations to 6                
          years when the taxpayer omits amounts properly includable in                
          gross income and the omitted amounts exceed 25 percent of the               
          reported gross income.                                                      
               “The test for the extended limitations period under section            
          6501(e) may be expressed as a fraction.”  Harlan v. Commissioner,           
          supra at 40.  In that fraction, the numerator is the amount                 
          properly includable in gross income that the taxpayer omitted               
          from the return.  The denominator is the amount of gross income             
          stated in the taxpayer’s return.  See sec. 6501(e)(1)(A); Harlan            
          v. Commissioner, supra.                                                     
               This Court has found that the section 61 definition of                 
          “gross income” generally applies to section 6501(e)(1)(A).  E.g.,           
          Hoffman v. Commissioner, 119 T.C. 140, 148 (2002); Insulglass               
          Corp. v. Commissioner, 84 T.C. 203, 210 (1985).  In the case of a           
          trade or business, however, section 6501(e)(1)(A)(i) modifies the           
          term “gross income” to mean “the total of the amounts received or           
          accrued from the sale of goods or services (if such amounts are             

                              which is omitted from gross income                      
                              stated in the return if such amount is                  
                              disclosed in the return, or in a                        
                              statement attached to the return, in a                  
                              manner adequate to apprise the Secretary                
                              of the nature and amount of such item.                  

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