14
rules similar to. We note, however, that based on the record, if
item (e) were found to represent a partnership item for purposes
of the same share requirement, the allocations thereof on
Westco's 1985 partnership return and attached Schedules K-1 would
fall within the scope of section 704(c) or rules similar to and
would not have affected the availability of the small partnership
exception.5
Based on the foregoing, we conclude that Westco and Makalu
are excepted from the partnership audit and litigation provisions
of TEFRA for the taxable years at issue pursuant to the small
partnership exception of section 6231(a)(1)(B), and, as a result,
respondent was not required to issue FPAA's with respect to the
partnerships within the statutory periods. Accordingly, we deny
petitioners' motions to dismiss for lack of jurisdiction.
During the hearing on this matter, petitioners orally
requested that, in the event that respondent prevails and
5
The Schedules K-1 attached to Westco's 1985 return reflect
the following reconciliation of the partners' capital accounts:
Petitioner Ham
(a) Capital account at beginning of year $191,955 $93,161
(b) Capital contributions during year 59,591 -0-
(c) Ordinary income/loss (3,563) 311
(d) Income not included in column (c) -0- -0-
plus nontaxable income
(e) Loss not included in column (c) (6,125) (3,063)
plus unallowable deductions
(f) Withdrawals and distributions 241,858 90,409
(g) Capital account at end of year -0- -0-
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