Non-TEFRA Partnership, Assessment Statute, Negative Capital Account
With respect to an LLC taxed as a partnership (non-TEFRA partnership), I understand that a partner with a negative capital account (negative partnership basis) must generally take such negative basis into his income in the year the partnership liquidates. I further understand that the U.S. Supreme Court has ruled that the six year assessment statute under Code Section 6501(e)(1) does not apply to basis overstatements. U.S. v. Home Concrete & Supply, LLC, 132 S. Ct. 1836 (2012).
If a partner fails to report income arising from his negative capital account in a liquidated partnership and the negative capital account amount is greater than 25% of gross income reported on his filed individual return for the year the partnership liquidated, would the IRS be subject to the normal 3 year assessment statute or the 6 year assessment statute under Code Section 6501(e)(1).