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June 2, 2021

Surviving entity is equitably estopped from changing basis reporting for acquired assets after statute of limitations had run on acquired entity's tax year

In New Capital Fire, Inc. v. Commissioner, T.C. Memo. 2021-67, the Tax Court has held that the surviving entity in a merger is equitably estopped from changing its basis reporting for assets acquired in the merger because the statute of limitations had run, and tax could no longer be assessed against the acquired entity. In a prior decision, the Tax Court had held the acquiring entity's tax return began the running of the period of limitations as to the acquired entity's final tax year and, as a result, the deficiency notice issued to the acquired entity was untimely.


New Capital Fire, Inc. v. Commissioner