IRS Held to Three-Year Timeline to Audit Tax Shelters
By James F. McDonough, Jr. on May 11th, 2012
The Supreme Court recently ruled the Internal Revenue Service is required to audit tax shelters within a three-year period, after which the statute of limitations will go into effect, despite the agency’s protests.
The Court ruled in favor of Home Concrete and Supply LLC after the IRS took roughly six years to launch an audit against the company for a Son of Boss tax shelter.
The case revolved around the sale of Home Oil and Coal Co., which had been sold in 1999 by its two shareholders, Robert Piece and Steven Chandler. The shareholders filed their 1999 taxes in 2000, and the IRS audited them in 2006 after determining that they used a pass-through company to increase their cost basis when filing. After the sale was finalized, the shareholders had just a $69,000 capital gain on a $10 million sale.
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