Rafizadeh v. Commissioner, 150 TC 1: Extended Statute of Limitations Under Section 6501(e)(1) Not Applicable to Income Earned on Foreign Financial Assets

In Rafizadeh v. Commissioner, 150 TC 1, the Tax Court held that the extended statute of limitations under Section 6501(e)(1) does not apply to income earned on foreign financial assets.  The case summary is as follows:

I.R.C. sec. 6038D, enacted on Mar. 18, 2010, and effective for taxable years beginning after the date of enactment, imposes new reporting requirements with respect to certain “specified foreign financial assets”. I.R.C. sec. 6501(e)(1)(A)(ii), also enacted on Mar. 18, 2010, provides a six-year period of limitations if the taxpayer omits from gross income amounts attributable to one or more assets with respect to which information is required to be reported under I.R.C. sec. 6038D.

Held: Because I.R.C. sec. 6501(e)(1)(A)(ii) applies only to omissions from gross income of amounts attributable to assets with respect to which the reporting requirement of I.R.C. sec. 6038D is applicable (or would be applicable without regard to specified exceptions), it is effective only for tax years with respect to which the reporting requirement of I.R.C. sec. 6038D is effective.

See full opinion in Rafizadeh v. Commissioner, 150 TC 1, by clicking here.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.

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