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dissolution; the partnership's principal place of business during
its wind-down period was located in New York, New York.
The Scarfias were married and filed joint Federal income tax
returns for the years at issue. Mr. Scarfia's investment in the
partnership was purchased only in his name. The Schedules K-1
issued by the partnership were issued solely in the name of Mr.
Scarfia. The Scarfias resided in the State of Florida for all
periods relevant to this proceeding.
On April 25, 1986, Mr. Scarfia filed a petition in
bankruptcy with the U.S. Bankruptcy Court for the Middle District
of Florida.5 Mr. Scarfia subsequently was granted a discharge by
order of the Bankruptcy Court dated March 20, 1992. Mrs. Scarfia
did not file a petition in bankruptcy.
Discussion
The TEFRA Provisions
Pursuant to the TEFRA provisions the tax treatment of
"partnership items" generally is to be determined at the
partnership level. See Maxwell v. Commissioner, 87 T.C. 783, 788
(1986). Partnership items include each partner's proportionate
share of the partnership's aggregate items of income, gain, loss,
deduction, or credit. Sec. 6231(a)(3); sec. 301.6231(a)(3)-
5
Mr. Scarfia's bankruptcy case originally was filed
pursuant to ch. 11 on Apr. 25, 1986, and was converted to ch. 7
on Nov. 4, 1986.
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