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During 1990, petitioner Aron B. Katz (Mr. Katz) held limited
partnership interests in a number of partnerships. Each of the
partnerships used the calendar year for tax reporting purposes,
as did Mr. Katz.
On July 5, 1990, Mr. Katz commenced a bankruptcy proceeding
in the U.S. Bankruptcy Court for the Southern District of New
York by filing a petition for relief under chapter 7 of the U.S.
Bankruptcy Code. Mr. Katz did not make an election under section
1398(d)(2) to bifurcate his 1990 taxable year into two short
taxable years on account of his bankruptcy filing. Accordingly,
Mr. Katz’ individual income tax return for 1990, on which he
claimed the status of a married person filing separately, covered
the entire calendar year.
On account of Mr. Katz’ bankruptcy proceeding, some of the
partnerships undertook an interim closing of the books with
respect to Mr. Katz’ partnership interest in determining his
distributive share of partnership tax items for 1990. In doing
so, each of these partnerships subdivided the distributive share
determined in respect of Mr. Katz’ interest for the entire 1990
partnership taxable year (the 1990 calendar year distributive
share) into two categories: The first consisted of those items
attributable to the period prior to July 5, 1990 (the prepetition
items), and the second consisted of those items attributable to
the remainder of the 1990 calendar year (the postpetition items).
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