Tax Legal Services · Primary-source case analysis

Bufferd: The Shareholder’s Return Controlled the S-Corporation Adjustment Period

By Aneeta Mishra and Timothy Chan

Published April 29, 2026

Bufferd identifies the return that starts the assessment clock when pass-through items affect a shareholder’s individual liability.

An S-corporation loss flowed to a shareholder

The corporation reported a loss that reduced the Bufferds’ individual tax. The IRS later adjusted the corporate item after the corporation’s limitations period had expired but while the shareholder period remained open by agreement.

Assessment concerned the shareholder’s tax

An S corporation generally pays no entity-level income tax on passed-through items. The deficiency was assessed against the shareholders based on their individual return.

The relevant return was the individual return

Section 6501 measures the period from the return of the taxpayer whose liability is assessed. The corporation’s information return did not start the limitations period for the shareholder’s separate tax.

Disposition

The Court unanimously affirmed the assessment as timely. Special unified audit regimes enacted for other entities or later years require separate analysis.

Key takeaways

• Identify whose tax is being assessed.
• Track each entity and owner filing date separately.
• Review extensions and consent agreements.
• Check the audit regime governing the relevant year.