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$1,000,000, inclusive of residences and personal property, or
income of $200,000 per year for each unit of investment.
C. Partnership-Level Litigation
On June 5, 1989, respondent issued Notices of Final
Partnership Administrative Adjustment (FPAA) to Masters’ tax
matters partner (TMP) for 1982, 1983, 1984, and 1985.
Subsequently, on June 19, 1989, copies of the FPAA’s for 1982,
1983, and 1984 were sent to Keith and Marilyn West. On the same
date, a copy of the FPAA for 1982 was sent to Warren and
Elizabeth West. In the FPAA’s, respondent disallowed the losses
that Masters had reported on its 1982, 1983, 1984, and 1985
Federal income tax returns and determined that Masters did not
incur “a loss in a trade or business or in an activity entered
into for profit or with respect to property held for the
production of income.” Respondent also determined that Masters’
basis in the recycling equipment was zero, rather than
$7,000,000, for purposes of the investment tax and business
energy credits.
Subsequently, a petition was filed by Masters’ tax matters
partner. On February 23, 1994, the Court entered a decision in
Masters Recycling Associates, Sam Winer, Tax Matters Partner v.
Commissioner, docket No. 18417-89. This decision reflects a full
concession by Masters of all items of income, loss, and the
underlying equipment valuation used for tax credit purposes.
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