In Uncategorized on 09/18/2019 at 19:18

Discovery Gateway Spectrum, LLC, Valencia Project, LLC, Tax Matters Partner, Docket No. 20827-16, filed 9/18/19, tried to dismiss a FPAA, while IRS sought summary J. The question is three (count ‘em, three) 1065s, the first slightly late for the year at issue, and the other two while that year was under examination, four years later.

DGS wanted to claim that the partnership had terminated by change of ownership during year at issue, but they’d already filed, slightly late, for that year, on a calendar year basis. So they needed to file a return for the pretermination short period. They tried this four (count ‘em, four) years later, after the calendar year return was under examination. Then they filed the last to correct the misdesignation of the TMP in the previous return.

The IRS rejected the second return. There’s a question whether IRS accepted the last-named return, but since neither it nor its predecessor amended the old calendar-year return, the fact question doesn’t defeat summary J.

If you’re slightly confused by now, so is Judge Ruwe. He gets his dates backward. “There is a factual dispute over whether respondent accepted the January 10, 2014, return. The record establishes that the January 10, 2014, return (if accepted) was to amend the August 7, 2014 (rejected) return.” Order, at p. 2. Judge, I think you meant “(T)he record establishes that the January 10, 2014, return (if accepted) was to amend the August 7, 2013 (rejected) return.”

So IRS issued two FPAAs, one for the pretermination period, and one for the rest of that year. Since each covered different matters, the one-FPAA-per-year rule doesn’t apply. See my blogpost “Jumping Through the Mill,” 9/28/15.

Howbeit, did the last two returns serve to restart SOL? DGS claims it wasn’t a partnership after its termination, therefore the FPAA couldn’t apply post-termination. No, says Judge Ruwe, if you file as a partnership for a year, you’re subject to TEFRA, even if you’re not a partnership.

Whatever the shortcomings of the original filed 1065, it was enough to start the SOL. But there were five (count ‘em, five) extensions, signed by Mr W.

“Mr. W signed each extension with the signature line, “Hyannis Port Capital, Inc. [HPC], TMP by W, President”. For purposes of respondent’s motion, we construe the disputed facts in the light most favorable to petitioner: HPC is not DGS’s TMP or a member of DGS for the [pretermination] period, and The Valencia Project, LLC (TVP) was designated [in the third] return as the TMP for the [pretermination] period and respondent knew this fact.” Order, at p. 4. (Name omitted).

However, Mr. W was a versatile fellow.

“Mr. W was also the manager of TVP. Accordingly, he was the proper person to sign the extensions for both HPC and TVP. Respondent reasonably believed that Mr. W had authority to sign the extensions for the [pretermination] period. We find that the signature line identifying Mr. Wilson as HPC’s president is immaterial. We hold Mr. Wilson had apparent authority to extend the limitations period for DGS’s [pretermination] June30 period.” Order, at p. 4.

It’s the person, not the title.


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