Block on Trump's Asylum Ban Upheld by Supreme Court
The Supreme Court ruled last week in U.S. v. Home Concrete & Supply that three years was plenty of time for the Internal Revenue Service (IRS) to determine whether a taxpayer has overstated the basis in property that he has sold, and understated the gain received from the sale.
The case stemmed from an investigation in the Son of Boss tax shelters, which created paper losses to offset real gains. ("Boss" is an acronym for "bond and option sales strategies.")
The IRS generally has three years after a return is filed to assess a deficiency against a taxpayer. In 1954, Congress gave the Internal Revenue Service an extended statute of limitations to find tax cheats when the taxpayer "omits from gross income" more than 25 percent of his or her tax liability.
In Home Concrete, the IRS tried to argue that the tax code was ambiguous and that overstatement of basis -- known as a Son of Boss transaction -- was the same as an omission of gross income. Under the IRS's theory, the six-year statute of limitations should apply in Son of Boss situations, reports Reuters.
A number of courts actually agreed with the IRS as the issue made its way to the Supreme Court, according to Forbes. The IRS won the six-year statute of limitations in the Seventh, Federal, Tenth, and D.C. Circuits, while the Fourth, Fifth, and Ninth Circuits limited the IRS to the three-year statute of limitations. (The Court affirmed the Fourth Circuit in U.S. v. Home Concrete & Supply.)
The Supreme Court's decision could affect almost $1 billion in contested tax revenues from Son of Boss shelters, reports Reuters.
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