Statute of Limitations

[Black Bart]

Interesting note from a trade publication related to that thing about the three year limit being extended to six years in case of a 25% understatement of gross income.

New exception: The Tax Court has ruled in Bakersfield Energy Partners LP (128 TC No. 17, 6-14-07) that overstating the basis of an asset reflected on your tax return does not extend the three-year statute, even if the understatement of income caused by the error exceeds 25% of your gross income, because the transaction was reported on the return.

[Golden Rocket]

What Impact?

Bart, from this court ruling what did we learn?

From best I can tell, if an item of income is disregarded entirely, the penalty applies.
If the item IS disclosed on the form, but is understated, then no penalty. Wonder what prompted the tax court to rule the way they did?

Whadd'ya think?

[bertrans]

Imapct

Not much impact, I'm afraid.
The decision focuses squarely on partnerships alone. In addition, Tax Court decisions do not set precedents nor may they be used as precedent. They may, however, be cited within the context of a larger argument.

[Black Bart]

The Big Picture

(What Impact?)...Wonder what prompted the tax court to rule the way they did?...Whadd'ya think?

Thanks for responding, GR; I just hate to post anything that doesn't get at least an "amen."

What made 'em do it? I dunno, but Bert's analysis points up sump'n I'm reminded of ever' now and then -- and that is, it's risky business puttin' up a shoot-from-the-hip tax blurb.

Here I thought that was a tidy little "out" for all comers (I like to know what parachutes are available in case of emergencies), but Bert's flak attack shot that notion full of holes; i.e., ...partnerships only...no precedent value..."within the context of a larger argument" (you can build a campfire, but only during a forest fire -- AKA "the big picture").

I thought only "Tax Hotline" and its ilk put out those flash-in-the-pan attention-grabbers, but mine was in a reputable organization's monthly newsletter. Just goes to show you cain't be too careful nowadays -- 'specially when there might be one of those pesky and (pick one) knowlegeable/know-it-all Yank taxslingers about.

[bertrans]

Statute

Now how did you figure out I was a Yank?

[Golden Rocket]

Bert & Bart

Bart can tell a Yankee a mile away. We define Yanks as people
who knows more than we does. And the worstest thing is they
talks funny.

There are good ones, too. They move down here and just stay.

Kudos, Bertrans, for taking the time to read the case.

[JohnH]

Now how did you figure out I was a Yank?

Could it have something to do with that "Location: info? Once he ruled out Philadelphia, Mississippi, he prretty well had you pegged as being north of the Mason-Dixon line.

[New York Enrolled Agent]

Not much impact, I'm afraid.
In addition, Tax Court decisions do not set precedents nor may they be used as precedent.

That is simply NOT true. Regular Tax Court cases cited such as 128 TC No. 17 have FULL precedential value. Tax Court Memo cases have some precedential value.

Only Tax Court Summary cases can not be cited as precedent as per IRC §7463.

[bertrans]

statute

That is simply NOT true. Regular Tax Court cases cited such as 128 TC No. 17 have FULL precedential value. Tax Court Memo cases have some precedential value.

Only Tax Court Summary cases can not be cited as precedent as per IRC §7463.

Partially true. While you are at it, why not see if the Commissioner acquiesced? That is not a trivial issue.. My point is not to approach this sort of thing with the view that a Tax Court decision is going automatically to redeem your position absent other lines of argument. Peace.

[New York Enrolled Agent]

Partially true.

I'm curious - Exactly which part of what I wrote is PARTIALLY true?

[bertrans]

statute

I'm curious - Exactly which part of what I wrote is PARTIALLY true?

Your statement that (1) taxs court decisions entered as the present case was have 'FULL precedential' value, and (2) only summary cases have no precedential value per IRC sect. 7462, puzzles me, but I am easily puzzled. Statement (2) is correct, but I balk at the 'only'. As to statement (1), why do tax court decisons begin with the boiler-plate statement,'This decision may not be used as precedent'? Have you checked about the Commissioner's acquiescence yet? It's in the IRB.

Peace.

[bertrans]

statute

I'm curious - Exactly which part of what I wrote is PARTIALLY true?

My apologies. I have just realised my error whilst I was outside smoking (alas, another mark against me, in addition to being a Yank ) I improperly, but unconsciously, conflated two meanings of 'precedent': (1) legal precedent, as in citing a previous decision in the context of a later case, and (2) citing a tax court case as 'precedent' in the context of an examination. Thank you.

[Black Bart]

Wait, wait!

...just realised my error whilst I was outside...smoking...another mark against me, in addition to being a Yank...I improperly...conflated...

Dear Bert,

I admire your candor for 'fessin' up, but do you think that, conflatin' aside (I wouldn't do it in mixed company if I's you), I can still use this dodge after all? I'm assumin' that your "partnership only" rule still holds, but what's the effect of doin' away with the "no precedent" leg of the tripartite argument on the context ("big picture") component?

That NYEA's sump'n, id'ne? A reg'ler walkin' tax encyclopedia and knows 'bout as much stuff as Bees Knees and the late Armando Beaujolais (all three are smart Yankees too, of course).

Listen, don't take it too hard about bein' a Northerner; shoot, a person cain't help where they're born and it happens in the best of families. As for the smokin'...well, you're considerate enough to go outside -- I've got a client who's real fond of Skoal and I wish he'd leave his cup outside (I think). Too, as GR (a Tennessee boy) said, y'all are generally more up-to-snuff on things. My Granny once summed it up so; "Those folks (1) Talk funny (2) Know lots'uh stuff (3) Live far off (4) Are ill-mannered" Never mind about that last part (she was always pretty cranky herself) 'cause I've met some real nice folks from "up North" on this board and, so far, I haven't noticed any accents at all. So anyway, I'm willin' to let bygones be bygones and hope you'll do the same. Peace to you, too.

[bertrans]

statute

Dear Bert,

I admire your candor for 'fessin' up, but do you think that, conflatin' aside (I wouldn't do it in mixed company if I's you), I can still use this dodge after all? I'm assumin' that your "partnership only" rule still holds, but what's the effect of doin' away with the "no precedent" leg of the tripartite argument on the context ("big picture") component?

That NYEA's sump'n, id'ne? A reg'ler walkin' tax encyclopedia and knows 'bout as much stuff as Bees Knees and the late Armando Beaujolais (all three are smart Yankees too, of course).

Listen, don't take it too hard about bein' a Northerner; shoot, a person cain't help where they're born and it happens in the best of families. As for the smokin'...well, you're considerate enough to go outside -- I've got a client who's real fond of Skoal and I wish he'd leave his cup outside (I think). Too, as GR (a Tennessee boy) said, y'all are generally more up-to-snuff on things. My Granny once summed it up so; "Those folks (1) Talk funny (2) Know lots'uh stuff (3) Live far off (4) Are ill-mannered" Never mind about that last part (she was always pretty cranky herself) 'cause I've met some real nice folks from "up North" on this board and, so far, I haven't noticed any accents at all. So anyway, I'm willin' to let bygones be bygones and hope you'll do the same. Peace to you, too.

Thanks for being understanding. What I meant to say was that I wouldn't want to walk into an IRS audit, where the only arrow in my quiver was a tax court decision. I would cite it, if it was relevant, but if the IRS disagrees, and it can, I'd end up in court, pleading for a decision for my client. I really appreciate this message-board. Thanks again.