In Uncategorized on 04/07/2021 at 20:04

TEFRA, the dinosaur lumbering towards extinction, still leaves footprints in its wake. Today, it leaves its mark on bankruptcy, even when the bankruptcy case is dismissed. So Eric Hall is left by the roadside, in Roadhouse Wines, Eric Hall, A Partner Other Than The Tax Matters Partner, 17109-019, filed 4/7/21.

Judge Kathleen Kerrigan tosses Eric, who wanted in as a partner other than the tax matterer. Eric petitioned the FPAA for the year at issue when the tax matterer did not, claiming Section 6226(b) weigh-in rights. Two (count ’em, two) years after the year at issue, Eric had filed Chapter 13 wage-earner. When he petitioned in USBCNDCA, Eric hadn’t filed his own 1040 for year at issue,

Eric’s bankruptcy petition gets tossed for failure to convert to Chapter 7 per 11USC§1307(c). Not discouraged thereby, Eric tries to file an amended Form 1065 for Roadhouse six years after the year at issue.

Seven (count ’em, seven) years after year at issue, and five years after Eric’s bankruptcy toss, Eric petitions the FPAA.

“No partner may file a petition under section 6226(b) unless such partner would be treated as a party to the proceeding. Sec. 6226(d)(2). Generally, each person who was a partner during the taxable year is treated as a party to an action filed pursuant to section 6226(b). Sec. 6226(c)(1). However, a partner is not treated as a party if the partnership items of such partner for the partnership taxable year became nonpartnership items by reason of one or more of the events described in section 6231(b), which events include conversion by reason of the partner’s filing of a bankruptcy petition. Secs. 6226(d)(1), 6231(b)(1)(D), 6231(c)(1)(E); sec. 301.6231(c)-7(a), Proced. & Admin Regs..” Order, at p. 3.

Though her explanation is a little jumbled, Judge Kerrigan sets it all out.

“Upon the filing of a petition in bankruptcy, a partner’s partnership items convert to non-partnership items if certain conditions are present and consequently, such partner no longer has an interest in the outcome of these proceedings. The partner’s partnership items convert into nonpartnership items as the filing of the date of the petitioner, if: (1) the partner is named as a debtor in the petition; (2) the partnership’s taxable year has ended prior to the filing of the petitioner; and (3) the government was able to file a claim in bankruptcy for the tax attributable to the partnership items.” Order, at p. 3. (Citations omitted).

Judge, I think you meant “The partner’s partnership items convert into nonpartnership items as of the date of the filing of the petition.” Bankruptcy courts don’t file the petitioner’s date, or the petitioner, much as the creditors might wish.

Howbeit, IRS had a chance to file as creditor in Eric’s abortive bankruptcy proceeding. And of course the year at issue was long since over.

That Eric’s bankruptcy petition got tossed doesn’t matter; it was filed, and IRS put in its claim.

March out Eric.


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