CCA 200944035: Misvaluation does not extend the limitations period under section 6501(e)(2)

Plain-English summary

This Chief Counsel Advice addresses whether an item must be entirely omitted to extend the period of limitations under IRC § 6501(e)(2). It agrees that a complete omission is required and that misvaluing an item does not extend the limitations period. The Advice notes that the Service has litigated cases involving overstated asset basis for § 6501(e)(1) purposes, but says that the Service conceded in the Salman Ranch opinion that an item must be fully omitted to fall under § 6501(e)(2).

Ruling snapshot

• Question: Does misvaluation of an item extend the period of limitations under IRC § 6501(e)(2)?
• Outcome: Advice given
• Key authorities: IRC § 6501(e)(1), (e)(2); Salman Ranch opinion

Full text (IRS public release)

ID: CCA_2009082114545243 Number: 200944035
Release Date: 10/30/2009
Office: --------------
UILC: 6501.16-00

From: --------------------
Sent: Friday, August 21, 2009 2:54:53 PM
To: ----------------
Cc:
Subject: FW: IRC 6501(e)(2) question

------- - ----- has asked me to assist with your question.

----------- is correct that an entire item must be omitted and that the misvaluation of an item would not extend the period of limitations. We have been litigating (and losing) some high profile cases with respect to overstating the basis of an asset for 6501(e)(1) purposes, but as you can see from the Salman Ranch opinion, even we concede that an item must be fully omitted to fall within 6501(e)(2).