Brand X and Omissions from Gross Income

Tax Analysts, p. 665, February 2010

6 Pages Posted: 20 Mar 2011

Date Written: February 1, 2010


In this article, the author argues that the IRS and Treasury were mistaken in concluding that the Supreme Court’s 2005 Brand X decision provided authority for a regulation interpreting the 25 percent omission from gross income rule in the statute of limitations as being applicable to understatements of gross income resulting from basis overstatements, contrary to the Supreme Court’s 1958 decision in Colony. Brand X authorizes agencies to override court interpretations of statutory provisions only when the court interpretation represents a Chevron step two holding, but not when the court interpretation is a Chevron step one holding. Colony is a step one holding and as such cannot be reversed by a regulation.

Suggested Citation

Smith, Patrick J., Brand X and Omissions from Gross Income (February 1, 2010). Tax Analysts, p. 665, February 2010. Available at SSRN:

Patrick J. Smith (Contact Author)

Ivins, Phillips & Barker ( email )

1717 K Street, NW Suite 600
Washington, DC 20006
United States

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