In this case, the Tax Court held that the IRS failed to timely issue the plaintiff a Notice of Final Partnership Administrative Adjustment (FPAA) and, as a result, couldn't make adjustments to the plaintiff's partnership returns and to returns of individual partners. Whether the FPAA was timely depended on whether the three-year or six-year statute of limitations for tax assessment applied. The Tax Court determined that the shorter statute applied. On appeal, the court noted that the issue turned on whether an omission from gross income exceeded 25 percent of the amount of gross income shown on the return in accordance with I.R.C. Sec. 6501(e)(1)(A)(i). While court noted that overstated basis cannot constitute an omission from gross income, appellate court noted that Tax Court did not address other argument of IRS that individual partners had failed to disclose more than $10 million in proceeds earned by virtue of liquidation and sale of plaintiff to another entity in a sham transaction. Tax Court's decision vacated and decision remanded. Beverly Clark Collection, LLC v. Comr., No. 12-71968, 2014 U.S. App. LEXIS 8086 (9th Cir. Apr. 29, 2014).