If agreement cannot be reached at division level, the District Director will make the necessary decision. The six-year statute is a fixed and determinable statute date and must be protected. Gross income, for this purpose, is defined as receipts before expenses or cost of goods sold. The omission must be attributable to unreported income rather than excessive deductions. Thus, if the taxpayer discloses a flow-through profit or loss, a copy of the appropriate return is required to correctly determine the taxpayer's share of the gross income.
Capital gains affect gross income only in the amount of the net gain on each transaction.
Net capital gain per transaction determines gross income. Capital losses should not be considered. An amended return filed after the due date is not considered in the computation. The six-year statute can be extended on Form 872. All efforts should be made to protect the three-year statute before relying on a secondary statute.