United States v. Home Concrete & Supply, LLC

Holding

Overstatement of basis is not an omission from gross income that triggers the extended six-year statute of limitations under section 6501(e)(1)(A); the three-year limitations period applies, and a contrary Treasury regulation cannot override Colony Inc. v. Commissioner.

Facts

The taxpayers used a Son-of-BOSS tax shelter to inflate basis and reduce reported gain. The IRS issued deficiency notices more than three but less than six years after the returns were filed, relying on the six-year statute for substantial omissions and on Treasury Regulation section 301.6501(e)-1.

Reasoning

Justice Breyer held that Colony Inc. v. Commissioner (1958) had already construed the statutory phrase 'omits from gross income,' which Congress reenacted in the 1954 Code. The 2010 Treasury regulation could not displace that judicial construction under Brand X because there was no statutory ambiguity for the agency to fill.