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reported a $20,000 guaranteed payment and a partnership ordinary
loss of $130,260. Turning to the statutory notice of deficiency,
we find that respondent made a substantial adjustment to the
partnership ordinary loss claimed by petitioners. No adjustment
was made to the $20,000 guaranteed payment.
Ultimately, the parties executed a Form 906. The first
"WHEREAS" clause refers to a dispute "with respect to the
taxability of the taxpayer's distributive share of gains or
losses from [Federal] arising from security trading transactions
* * *". The second "WHEREAS" clause states, that the parties
wish to determine "all of the federal income tax consequences of
the taxpayers' interest in the partnerships". Reading these
clauses, together with the remainder of the Closing Agreement,
leads us to conclude that the specific adjustments agreed upon
relate only to partnership adjustments. Thus, the $21,822
allowable loss is to be deducted from the claimed $130,260, which
results in an adjustment of $108,438. This is respondent's
position.
Petitioners argue that the Closing Agreement should be
interpreted to exclude the $20,000 guaranteed payment which
petitioner received in 1980 and which petitioners reported on
their 1980 return. Petitioners' arguments are based on the
premise that the absence of any specific provision in the Closing
Agreement covering the $20,000 guaranteed payment necessarily
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