Cynthia Pragias didn’t tell enough about the $4 million capital gain she got when the partnership of which she was a partner sold some stock options, so 6SOL is on tap. Since Cindy wants summary J that 3SOL applies and has run out, Judge Travis A. (“Tag”) Greaves, giving IRS (non-movant) every faviorabkle inference, assumes that $4 million is more than 25% of Cindy’s AGI (and it certainly would be more than 25% of mine).

But there were only six individual partners in Cindy’s partnership, and they were all onshore, so too small for TEFRA, unless they elected in per Section 6231(a)(1)(B)(ii), as it was in effect for year at issue, and they didn’t. So no need for FPAA, wherefore Tax Court has jurisdiction in Athanasios Pragias and Cynthia Pragias, 2021 T. C. Memo. 82, filed 6/30/21.

Cindy did disclose about $1 million capital gain, but never specified whence it came, and never mentioned any gain from the partnership that sold the options. Cindy claims she just understated the gain, but that doesn’t convince Judge Tag Greaves.

“Their return did not apprise the IRS of the amount of the gain. Adequate disclosure is a question of fact, and the taxpayer bears the burden of proving that the return adequately disclosed the nature and amount of the determined omitted income. In a quintessential case of adequate disclosure, the taxpayer errs in computing gross income but fully discloses the amounts underlying the error elsewhere in the return.” 2021 T. C. Memo. 82, at p. 11. (Citation and footnote omitted, but the footnote says that the capital gain reported didn’t identify the partnership that generated the gain).

And the partnership didn’t file Form 1065 nor a K-1, until way after the audit for year at issue had commenced. Way too late.

Cindy doesn’t get summary J on 3SOL. 6SOL is in play.