Bakersfield Energy Partners, LP v. Commissioner

IKUTA, Circuit Judge:

The IRS generally has three years after a return is filed to assess a tax deficiency, but it has six years to do so when the return “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.” 26 U.S.C. § 6501(a), (e)(1)(A). This case requires us to decide whether the IRS can use this extended six-year limitations period to assess a deficiency where a taxpayer has overstated its basis in an asset and thereby lowered the amount of gross income reported in its return. In other words,…