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(partnership), Roschuni v. Commissioner, supra (S corp.).
Indeed, the Court of Appeals for the Second Circuit described the
process thusly in Estate of Klein v. Commissioner, 537 F.2d at
704:
Schedule H [more recently, Schedule E] of Form 1040,
labelled “Income from Partnerships, Estates, Trusts, and
Other Sources,” provides only one line for reporting
partnership income together with the name and address of the
partnership from which that income was derived. Schedule H
speaks in terms of “[t]otal income (or loss),” the reference
to losses obviously suggesting only a net (adjusted gross)
rather than a gross income figure. Given that limitation
upon the scope of the Form 1040, it is clear that the return
neither intends nor purports to show a taxpayer’s gross
income when that taxpayer has partnership income. Indeed,
gross income is not “stated in the return” in the case of
such a taxpayer unless one looks at the partnership return
as being a part of the personal income tax return. * * *
When we take the partnership’s information return into
consideration as part of the partner’s tax return, we find the
same limitations in the former document that the Court of Appeals
described in Estate of Klein v. Commissioner, supra, as to the
latter document. That is, the 1985 partnership information
returns for Pacific and Carlyle (Ridge’s 1st-tier partnerships)
and for Mission Resources (Theodore’s 1st-tier partnership) do
not provide for a showing of “gross income”. There is a line for
“total income (loss) (combine lines 3 through 10)”, (Form 1065,
1st p., l.11), but it is evident that several of the components
of total income are themselves net amounts. In those instances,
recourse must be had to other forms, schedules, statements, and
other documents attached to the 1st-tier partnership’s
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