Heckman v. Comm'r of Internal Revenue, No. 14-3251 (8th Cir. 2015)Annotate this Case
Heckman did not report, as income, a distribution from his employee stock ownership plan into his individual retirement account of investments worth $137,726 on his 2003 tax return. The IRS issued a notice of deficiency in 2010. The plan was not eligible for favorable tax treatment under 26 U.S.C. 401(a), so the distribution constituted taxable income. Heckman petitioned the tax court, arguing that the deficiency notice was untimely, because the statute of limitations expired three years after the filing of his return. The tax court determined that a six-year statute of limitations applied and held Heckman liable for a deficiency of $38,623. The Eighth Circuit affirmed. Under 26 U.S.C. 6501(a), the IRS must assess a deficiency within three years. Section 6501(e)(1)(A) extends that period to six years if the taxpayer “omits from gross income” an amount in excess of 25 percent of the gross income stated on the return. The distribution exceeded 25 percent of Heckman’s gross income for 2003. An amount is not considered “omitted” from gross income if it is “disclosed in the return, or in a statement attached to the return,” in an adequate manner. Heckman did not disclose the distribution.