- 8 - individual partner level following the completion of partnership- level proceedings. The Court agreed with the Commissioner that the additions to tax in question were affected items that could not be raised in the partnership-level proceedings. With regard to additions to tax for negligence, the Court stated in pertinent part: a partner will be liable for the addition to tax for negligence pursuant to section 6653(a) if he has an underpayment of tax some part of which is due to negligence. The existence of an underpayment of tax at the partner level cannot be made until the partner's share of distributable items of income, loss, deduction, and credit is determined in the partnership level proceeding. Once the partnership level proceeding ends, however, the factual question of whether any part of the underpayment was due to the partner's negligence must be answered at the partner level. N.C.F. Energy Partners v. Commissioner, supra at 744-745. However, in the Taxpayer Relief Act of 1997, Pub. L. 105-34, sec. 1238(a), 111 Stat. 1026, Congress amended section 6221 to provide that the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item shall be determined at the partnership level. H. Conf. Rept. 105-220, at 685 (1997), states in pertinent part: Present Law Partnership items include only items that are required to be taken into account under the income tax subtitle. Penalties are not partnership items since they are contained in the procedure and administration subtitle. As a result, penalties may only be asserted against a partner through the application of thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011