Dennis L. and Sharon E. Hayden - Page 9

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          not for profit activities) speaks in terms of "an individual or              
          an S corporation", but, when a partnership is involved, the so-              
          called for profit analysis focuses on the partnership and not the            
          individual.  See Fox v. Commissioner, 80 T.C. 972, 1006 (1983),              
          affd. without published opinion 742 F.2d 1441 (2d Cir. 1984),                
          affd. sub nom. Barnard v. Commissioner, 731 F.2d 230 (4th Cir.               
          1984).  In this regard, it should be noted that the election in              
          section 179(a) is phrased in terms of a "taxpayer may elect".                
          Surely petitioners would not contend that an election may not be             
          made for property in a business conducted by a partnership.  For             
          purposes of section 179(b)(3)(A), a partnership is a taxpayer.               
               It becomes apparent then that petitioners' dissatisfaction              
          is not with the regulation per se, but rather with the                       
          incorporation of the section 179(b)(3)(A) limitation in section              
          179(d)(8).  Thus, if we were to hold for petitioners, we would               
          have to read the section 179(b)(3)(A) limitation out of section              
          179(d)(8).  This we cannot do.  Section 179(d)(8) specifically               
          states:  "In the case of a partnership, the limitations of                   
          subsection (b)" apply to the partnership and the partners.  It               
          does not say that only subsection (b)(1) and (2) shall apply. See            
          Green v. Commissioner, T.C. Memo. 1998-356 (applying section                 
          179(b)(3)(A) to an "S" corporation).                                         
              At trial petitioners also seemed to argue that the term                 
          "taxable income" as used in section 179(b)(3)(A) should be                   
          interpreted to mean gross receipts of the trade or business                  
          carried on as a partnership.  This argument has no basis in law.             

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