- 10 - If respondent’s ultimate rejection of the amended return was warranted on procedural grounds, it was also appropriate as a matter of substantive law. A partnership is treated as a separate entity for tax accounting purposes: in general, the determination of allowable deductions, losses, and credits arising from a business conducted in partnership form is made at the partnership level, and the decision to report these items is made at the partnership level as well. Sec. 703. Each partner’s distributive shares of these items are determined pursuant to the partnership agreement. Sec. 704(a). The partner is required to take his distributive shares into account in determining his income tax. Sec. 702(a). The investment credit is one of the partnership items for which each partner must take into account his distributive share, determined by applying statutorily specified percentages to the share of total basis or cost of partnership section 38 property that is allocated to him under the partnership agreement and reported to him on Schedule K-1. Former secs. 46(a), (b), and (c) (before amendment in 1990); Southern v. Commissioner, supra at 54; sec. 1.46-3(f), Income Tax Regs. (...continued) revoke the carryover of the unused portion of the credit to that year, it was likewise ineffective, but for different reasons. Carryover of an investment credit is not a partnership item, but an “affected item”. Sec. 6231(a)(5); Maxwell v. Commissioner, 87 T.C. 783, 790 (1986). Therefore sec. 6227 is inapplicable and the general requirements for acceptance of amended returns expounded by this Court in Goldstone v. Commissioner, 65 T.C. 113 (1975) would govern. Petitioners did not satisfy these requirements.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011