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"in any case where the loss claimed exceeded the capital
account as shown on the K-1 (or if there was a negative
capital)". Petitioners contend that respondent is
"simply wrong on the facts", and, as to each partnership,
petitioner "had sufficient basis in the partnership to
claim the full amount of the loss shown on the K-1".
Petitioners contend that Mr. Lemons was subject to
"recourse liabilities" in each case and "when his capital
account, whether it be positive or negative, is added to
his share of recourse partnership liabilities, Lemons had
more than enough basis to utilize the full amount of the
loss shown on the K-1."
In passing, we note that both parties treat
respondent's first reason for disallowing the partnership
losses at issue; i.e., whether petitioner's adjusted basis
in each of the partnerships was equal to or greater than
petitioner's distributive share of the partnership loss
as required by section 704(d), as the rationale for the
adjustment made in the notice of deficiency; i.e., whether
the amount deducted was "more than you have 'at risk'".
Neither party raises section 465, which limits deductions
to the "amount at risk", or discusses the effect of that
section on the facts of these cases.
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