- 13 - 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.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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