It’s that form again, Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request, which Urban Dynamic, LLC, Resurgam Equity Investments, LLC, Tax Matters Partner, Docket No. 15755-19, filed 4/15/22, didn’t file with any of the multiple returns they filed for the two (count ’em, two) years at issue. The Form 8082 they did file came after the upper-tier partnership (of which UD was a partner) had gotten a “no change” for the years at issue, and UD had gotten a FPAA. The Forms 8275 Disclosure that UD filed with earlier returns disclosed basis enhancements in UD’s piece of the upper-tier that UD claims the upper-tier partnership got wrong, but that’s not enough for ChJIW (Chief Judge in Waiting) Kathleen (“TBS = The Big Shillelagh”) Kerrigan.

The upper-tier partnership makes the basis calls, and if the lower-tier partnership dissents, then they should file Form 8082. And get involved when the upper-tier partnership gets Letter 1787-F. Better yet, when the lower-tier partner contributes property to the upper-tier, spell out the basis.

“Partnership items include items relating to contributions to a partnership, to the extent that a determination of such items can be made from determinations that the partnership is required to make with respect to an amount, the character of an amount, or the percentage interest of a partner in the partnership, for purposes of the partnership books and records or for purposes of furnishing information to a partner. The determinations a partnership is required to make include the basis to the partnership of the contributed property, including necessary preliminary determinations, such as the partner’s basis in the contributed property. Treas. Reg. § 301.6231(a)(3)-1(c)(2)(iv). Failure by the partnership to make such determinations—for example, because it does not maintain proper books and records—does not prevent an item from being a partnership item.” Order, at p. 5. (Citations omitted).

And that means that the basis adjustments had to be hashed out in a FPAA for the upper-tier partnership, or else Tax Court has no jurisdiction. The items are partnership-level items, not partner-level items. And IRS never said they would treat these items as partner-level items for UD.

Now before my ultra-hip readers refer me to the Bipartisan Budget Act of 2015 and the regulations thereunder, note that the one of the years at issue was before the effective date of the BBA, and UD didn’t elect to use the BBA for the second year.

I can’t wait to see how a case like this would play out under the new régime.