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did own such properties. Petitioner then posits that IHCL's
ownership of interests in these lower tier partnerships is, in
effect, a proportionate ownership interest in the properties of
those lower tier partnerships as well. Petitioner points to the
regulations governing allocation of nonrecourse deductions; these
expressly provide a "look-through" rule for situations involving
tiered partnerships. Petitioner posits that for purposes of the
nonrecourse deductions, the "look-through" rule is designed to
produce the same consequences for the upper tier partnership, in
this case IHCL, that would have resulted had IHCL directly held its
proportionate share of the properties owned by PGL and PLH.
Petitioner reasons that under these regulations, had PLH or PGL
incurred minimum gains on the disposition of their property, IHCL
would be required to realize its proportionate share of those
gains. Sec. 1.704-1T(b)(4)(iv)(j), Temporary Income Tax Regs., 53
Fed. Reg. 53166 (Dec. 30, 1988); see T.D. 8237, 1989-1 C.B. 180,
206.
Petitioner further contends that IHCL should be treated as
owning its proportionate share of PLH's and PGL's assets for
purposes of the comparative liquidation test of section 1.704-
1(b)(3)(iii), Income Tax Regs. Thus, according to petitioner, a
deemed liquidation of IHCL would imply a deemed liquidation of PLH
and PGL as well; as a result, the disposition of those nonrecourse
properties (upon the liquidations of PLH and PGL) would trigger
minimum gain chargebacks to IHCL.
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