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lines 1 through 7 of Pacific’s Form 1065 in order to determine
Pacific’s gross income. When we do that, we find that on line 4
of Pacific’s Form 1065 we are told to “See STMT #2”.
That statement is as follows:
STATEMENT # 2 - INC OTH PARTNERSHIPS
TEROS-PER K-1 -6,633
94-2735621
INTEREST-33%
SECTION 743 (B) ADJ -1,072
TOTAL STATEMENT # 2 - TO FORM 1065, LINE 4 -7,705
The record does not include information about the gross income
stated in the information return of Pacific’s 2d-tier
partnership.
We conclude that (1) respondent’s contentions are contrary
to the parties’ stipulations and (2) the parties’ stipulations
are consistent with the Court’s analysis. That is, (a) the 1st-
tier partnership’s information return is treated as an adjunct
to, and a part of, the taxpayer’s tax return, (b) the 2d-tier
partnership’s information return is treated as an adjunct to, and
a part of, the 1st-tier partnership’s tax return, and (c) in
determining the amount of gross income stated in the taxpayer’s
tax return, neither the Court nor the parties are limited to what
is stated on the first page of the tax return.
Respondent’s brief closes as follows:
Finally, respondent’s interpretation of Section 6501(e)
yields a sensible, administrable result. Looking through to
the lower tiers might require an audit of each of those
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