Homer N. Cummings - Page 12

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          Following the settlement, the Commissioner computed the                     
          taxpayer's income tax liability for 1982, taking into account               
          partnership items, to be equal to the tax due on an increase in             
          income of $30,065.  This figure represented the difference                  
          between $100,000 (the loss that the taxpayer claimed on its 1982            
          return) less $69,935 (the taxpayer's distributive share of                  
          partnership loss under the settlement).  In addition, after                 
          eliminating the partnership loss that the taxpayer carried                  
          forward from 1982 to 1983, the Commissioner determined that the             
          taxpayer owed additional income tax for 1983.                               
               The Commissioner later assessed the taxes described above as           
          computational adjustments.  In a subsequent refund action, the              
          taxpayer claimed that the Commissioner erred in treating the                
          above-described adjustments as computational adjustments, rather            
          than as adjustments requiring factual determinations at the                 
          partner level.  The United States District Court for the Western            
          District of Texas, citing Maxwell v. Commissioner, 87 T.C. 783              
          (1986), and Harris v. Commissioner, supra, agreed with the                  
          Commissioner that the adjustments were properly treated as                  
          affected items subject to computational adjustment.  In rejecting           
          the taxpayer's argument that the adjustments required factual               
          determinations at the partner level, the District Court pointed             
          out that the Commissioner did not adjust any other items on the             
          taxpayer's returns nor did the taxpayer dispute the dollar amount           
          of the adjustments that the Commissioner made to its 1983 tax               




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