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held individually until after the period of limitations had run.
This defense is without merit because the duty of consistency
applies equally to a taxpayer who innocently misrepresents a fact
in a time-barred year and one who misleads intentionally. See
Beltzer v. United States, supra at 212; Unvert v. Commissioner,
72 T.C. 807, 816 (1979), affd. 656 F.2d 483 (9th Cir. 1981).8
Petitioners also argue that the duty of consistency does not
apply because whether they own a property interest for Federal
tax purposes is controlled by State law.9 We reject this
argument. Determining whether the ranch was owned by the
8In Demirjian v. Commissioner, 54 T.C. 1691, 1696 (1971),
affd. 457 F.2d 1 (3d Cir. 1972), a case presenting similar facts,
we rejected the taxpayers’ arguments using a burden of proof
analysis. The taxpayers in Demirjian, like the taxpayers in this
case, claimed that they held title to certain real property as
tenants in common rather than as partners. They had filed
partnership tax returns and various correspondence which
represented that the partnership owned the real property.
Although we did not apply the duty of consistency to resolve the
case, we analyzed the applicable burden of proof and concluded
that the taxpayers had failed to demonstrate that the property in
question was not partnership property. We held that “the record
shows that * * * [the taxpayers] intended to and in fact did
carry on their prior corporate venture in partnership form, and
that they operated the business property conveyed to them as
partners. Petitioners have failed to prove otherwise.” Id. at
1697-1698. Here, too, the taxpayers “have failed to prove
otherwise.” Id. at 1698; see also McManus v. Commissioner, 583
F.2d 443 (9th Cir. 1978) (a taxpayer is estopped from denying
that real property is partnership property even though the
property is held as a tenancy in common), affg. 65 T.C. 197
(1975); Smith v. Commissioner, T.C. Memo. 1978-416 (land was
partnership property despite the fact that legal title to the
land was held as a tenancy in common).
9Petitioners alleged on brief that the partnership is a
California partnership and that California law applies.
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