- 28 -
part of an individual Form 1040 for a sole proprietor. See id.
at 767. We rejected their arguments, relied on Masterson v.
Commissioner, supra, and held that the denominator of the section
275(c) fraction is to be determined by what is stated on the
taxpayer’s tax returns without regard to the partnership’s
information returns. See Switzer v. Commissioner, 20 T.C. at
768. However, our determination was remanded by the Court of
Appeals for the Ninth Circuit on September 17, 1954, with
directions (in accordance with the stipulation of the parties in
Switzer) to vacate our decisions and enter decisions for the
taxpayers. See Rose v. Commissioner, 24 T.C. 755, 768 (1955);
Rev. Rul. 55-415, 1955-1 C.B. 412, 413.11
11Rev. Rul. 55-415, 1955-1 C.B. 412, although issued after
the enactment of the Internal Revenue Code of 1954, is the
Commissioner’s interpretation of section 275(c) of the Internal
Revenue Code of 1939. The ruling states, in pertinent part, as
follows (1955-1 C.B. at 413):
It is well recognized that gross income, as earned, belongs
to some taxable entity, and that a partnership is not a
taxable entity. It logically follows that the partners
should be considered as the owners of partnership gross
income.
* * * * * * *
* * * it is held that for the purpose of section 275(c)
of the Code “gross income” of a member of a partnership
includes his proportionate share of the gross income of the
partnership. See Harry Landau et al. v. Commissioner, 21
T.C. 414 [1953]. Any partner’s share of the gross income
reported in the partnership information return should be
considered as having been returned by the taxpayer as such
information return is a return by or on behalf of each
(continued...)
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