United States v. Home Concrete & Supply, LLC

Summary

The Supreme Court held that the six-year tax assessment limitation period in 26 U.S.C. § 6501(e)(1)(A) does not apply when a taxpayer overstates the basis of property and thereby understates gross income. Relying on Colony, Inc. v. Commissioner, the Court concluded that an overstatement of basis is not an omission from gross income under the statute. The Court affirmed the Fourth Circuit’s judgment and rejected Chevron deference for a Treasury regulation adopting the contrary interpretation.

Holdings

1. An overstatement of basis in property that is sold, and the resulting understatement of gross income, does not constitute an omission from gross income under § 6501(e)(1)(A). Therefore, the six-year limitations period does not apply.
2. The Treasury regulation interpreting § 6501(e)(1)(A) to include an understated amount of gross income resulting from an overstatement of basis cannot displace Colony's controlling interpretation because Colony resolved the statutory question and left no gap for the agency to fill.

Questions Presented

1. Whether 26 U.S.C. § 6501(e)(1)(A)'s six-year limitations period applies when a taxpayer overstates the basis of sold property and thereby understates gross income.
2. Whether a Treasury regulation interpreting § 6501(e)(1)(A) to include basis overstatements is entitled to Chevron deference despite the Supreme Court's prior decision in Colony, Inc. v. Commissioner.

Disposition

affirmed