Magazine article The CPA Journal

Does Filing a Partnership or S Corporation Return Start the Statute Running?

Magazine article The CPA Journal

Does Filing a Partnership or S Corporation Return Start the Statute Running?

Article excerpt

The Tax Court and the Circuit Court are split in their opinions as to whether the filing of a partnership or S corporation return starts the statute of limitations running. In Kelly v. Commissioner, 877 F. 2d 756(1989), Rev'g. TC MEMO 1986-405, the Circuit Court of Appeals for the Ninth Circuit overruled the Tax Court, and held that where an S corporation shareholder's statute of limitations on assessments had been extended, but where the statute on his or her S corporation had not been extended, a timely statutory notice of deficiency could not be issued once the statute of limitations had expired at the corporation level for items related to the corporation. The Eighth Circuit concurred, in Fendell v. Commissioner, (906 F.2d 362 (CA8, 1990), Rev'g. 92TC708 (1989), holding that the IRS could not make an adjustment to a beneficiary's return arising from a distribution from a complex trust when the statute of limitations with respect to the trust had expired.

However, in Siben v. …

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