In Uncategorized on 07/23/2018 at 16:08

Judge Holmes expresses the pious hope that Inman Partners, RCB Investments, LLC, Tax Matters Partner, 2018 T. C. Memo. 114, filed 7/23/18, is “…perhaps the last of its kind,” that is the last Son-of-BOSS case, 2018 T. C. Memo. 114, at p. 2.

Well, I won’t be sorry if it is the last, although these dodges furnished some real good blogposts. And furnished Judge Holmes one of his footnotes. Read 2018 T. C. Memo 114, footnote 1 at page 2, and then read my blogposts “They Were Warned; They were Given an Explanation; They Persisted,” 8/9/17, and “He Wuz Robbed! – Not!” 2/18/15.

Howbeit, today’s sole remaining question is whether the Form 872-I SOL extenders that the partners signed extended the SOL for the partnership items. The dodge was the old reliable, the short-year partnership that terminated three weeks before the partners’ calendar tax year ended.

“Does an extension for individual returns for a year that ends on December 31 include any partnership items from partnerships whose tax years ended less than a month before?  In WHO515 Inv. Partners v. Commissioner, T.C. Memo. 2012-316, appeal filed (D.C. Cir. Apr. 6, 2018), we said it did.  The taxpayers here admit that they would lose under WHO515, but point out it was only a Memorandum Opinion and ask us to rethink our reasoning.” 2018 T. C. Memo. 114, at pp. 1-2.

“In computing the taxable income of a partner for a taxable year, the inclusions required by section 702 * * * with respect to a partnership shall be based on the income, gain, loss, deduction, or credit of the partnership for any taxable year of the partnership ending within or with the taxable year of the partner. Sec. 706(a) (emphasis added).  Inman Partners’ short tax year ended on December 19, 2000–within each of its partners’ tax years, which all ended on December 31, 2000.  That means that the partners had to include their distributive shares of Inman Partners’ income, gain, loss, deduction, or credit for its final tax year on their 2000 tax returns.  To tie this to the disputed language in the IRS forms, the partners had to use these partnership numbers to report the “income tax due” on their returns for the calendar year 2000.

“The partners here did just that.  The Commissioner wasn’t satisfied with how they reported their incomes, however, so he made adjustments to Inman Partners’ partnership items. This is where another timing issue comes up:  Section 6501(a) provides the general rule that any tax deficiency ‘shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) * * * and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.’  That statute of limitations is for the ‘return required to be filed by the taxpayer (and does not include a return of any person from whom the taxpayer has received an item of income, gain, loss, deduction, or credit).’” 2018 T. C. Memo. 114, at pp. 7-8.

In WHO515, as in Inman, IRS used the right form; Form 872-I specifically includes any partnership item, affected item, computational item, and partnership item converted to nonpartnership item. The argument that the short-year partnership return is excluded from the SOL extender is irrelevant, as the partners need to report those items on their personal returns. And on those the SOL is extended.

WHO515 is confirmed.

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