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Background
On September 17, 1999, respondent issued a notice of final
partnership administrative adjustment (FPAA) to Crystal Beach
Development of Destin, Ltd. (the partnership) setting forth
adjustments to the partnership's returns (Forms 1065) for 1995
and 1996. Attached to the FPAA are: (1) A schedule of
examination changes which includes a statement that "Penalties or
additions to tax under IRC section 6662, which may be applicable
at the investor level, are being recommended in the examination
of the flow-through entity"; and (2) an "Explanation of Affected
Items" which states that "an addition to the tax is charged as
provided by Section 6662(a)".
Waters Edge Building Company, the partnership's tax matters
partner, filed a timely petition for readjustment with the Court.
The petition includes allegations contesting the imposition of
the accuracy-related penalty.
As indicated, respondent filed a motion to dismiss for lack
of jurisdiction and to strike. Respondent contends that the
Court lacks jurisdiction over the accuracy-related penalty in
this partnership-level proceeding on the ground that such penalty
is an "affected item" that can be reviewed only at the individual
partner level. Respondent further contends that allegations
pertaining to such penalty should be stricken from the petition
for readjustment.
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Last modified: May 25, 2011