Ezel / IRS Rulings / 201652022

Basis overstatement counts as omission from gross income

Number
201652022
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Limitations on Assessment and Collection (Barred v. Not Barred)
Topics
Procedure, penalties, and administration
Code sections
§ 6501
Ruling dated
October 30, 2016
Publicly released
December 23, 2016
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2016, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2016
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel explained that Congress amended section 6501(e)(1) in 2015 to address overstated basis. An understatement of gross income caused by overstating unrecovered cost or other basis is treated as an omission from gross income. The rule applies even when the basis overstatement does not concern a sold asset.

Ruling snapshot

  • Question: Does an overstatement of basis count as an omission from gross income under section 6501(e)(1) if it does not concern a sold asset?
  • Outcome: advice given
  • Key authorities: IRC § 6501(e)(1); Surface Transportation and Veterans Health Care Choice Improvement Act of 2015

Full text (IRS public release)

ID: CCA_2016112115175147
UILC: 6501.00-00

Number: 201652022
Release Date: 12/23/2016
From:
Sent: Sun 10/30/2016 11:10 PM
To:
Cc:
Bcc:
Subject: 6501 issue

Drew,

In regard to your question about overstated basis and section 6501(e): Congress amended section 6501(e)(1) in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236; Pub. Law No. 114-41) to provide that an understatement of gross income by reason of an overstatement of unrecovered cost or other basis is an omission from gross income. This applies even if the overstatement of basis is not in regard to a “sold asset.”

Please let me know if I may be of any further assistance.

Yours,

Elie

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