- 6 -
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
5(...continued)
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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Last modified: May 25, 2011