Crystal Beach Development of Destin Ltd. - Page 1

                                 T.C. Memo. 2000-170                                  

                               UNITED STATES TAX COURT                                

          CRYSTAL BEACH DEVELOPMENT OF DESTIN LTD.,                                   
          WATERS EDGE BUILDING COMPANY, TAX MATTERS PARTNER,                          
          Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent                  

          Docket No. 18413-99.                     Filed May 24, 2000.                

                    R issued a notice of final partnership                            
               administrative adjustment (FPAA) to P, the                             
               partnership’s tax matters partner, for the taxable                     
               years 1995 and 1996.  The FPAA was accompanied by an                   
               "Explanation of Affected Items" stating that a penalty                 
               under I.R.C. sec. 6662(a) would be “charged”.  P filed                 
               a petition for readjustment contesting adjustments to                  
               partnership items and the accuracy-related penalty                     
               under I.R.C. sec. 6662(a).  R filed a motion to dismiss                
               for lack of jurisdiction and to strike the portion of                  
               the petition contesting the accuracy-related penalty.                  
                    Held:  The Court lacks jurisdiction to review the                 
               accuracy-related penalty in this partnership-level                     
               proceeding.  See N.C.F. Energy Partners v.                             
               Commissioner, 89 T.C. 741 (1987).  Held, further, the                  
               amendments made by the Taxpayer Relief Act of 1997,                    
               Pub. L. 105-34, sec. 1238(a), 111 Stat. 1026, which                    
               provide that penalties will be determined in                           
               partnership-level proceedings, are effective for                       

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