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that
The Commissioner can only determine whether the
taxpayer understated his tax obligation and should be
assessed a deficiency after examining * * * [his]
return. Plainly, then, “the” return referred to in
�6501(a) is the return of the taxpayer against whom a
deficiency is assessed. * * * [Id. at 527.]
To better understand the Supreme Court’s holding, we briefly
review pre-Bufferd case development.
Before the conflict amongst the Court of Appeals holdings on
this issue, courts generally followed the principle that a
corporation and its shareholders were separate taxpayers. See
Moline Properties, Inc. v. Commissioner, 319 U.S. 436 (1943).
That principle held true even where the adjustments to one
taxpayer’s income derived from the other taxpayer.
This Court, in the context of a transaction concerning a
beneficiary and a complex trust, held that the return of the
beneficiary, whose income was being adjusted, was the starting
point for deciding when the assessment period expired. Fendell
v. Commissioner, 92 T.C. 708 (1989), revd. 906 F.2d 362 (8th Cir.
1990). Fendell involved a trust with two partnership investments
that resulted in losses. The beneficiary reported a loss from
the trust. The beneficiary’s tax years were extended by
agreement. Extensions were obtained from the trust for some of
its years, but not for the loss year. After the expiration of
the assessment period for the trust’s loss year, the Commissioner
mailed a notice of deficiency to the beneficiary disallowing his
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