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respectively. Respondent also determined that petitioner was
liable for section 6662(a) accuracy-related penalties of $908,
$370, and $241 for the respective years and a $120 addition to
his 1996 tax under section 6651(a)(1).1 Respondent’s
determinations stem in part from adjustments that respondent made
to depreciation deductions claimed by Thoroughbred Breeders
Partnership (TBP), a partnership in which petitioner is a
partner. For 1994, TBP was subject to the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, sec. 402(a), 96 Stat.
648. Petitioner also petitioned the Court for that year in his
capacity as TBP’s tax matters partner.
We decide first whether TBP may deduct the disputed
depreciation. We hold it may not. We decide second whether
petitioner had sufficient basis to deduct losses which passed
through to him from his wholly owned S corporation, Calvary
Equities, Inc. (Calvary). We hold he did.2
1 Section references are to the Internal Revenue Code in
effect for the subject years. Rule references are to the Tax
Court Rules of Practice and Procedure. Dollar amounts are
rounded.
2 The pleadings in this case raise three additional issues:
(1) Whether petitioner is liable for the addition to tax under
sec. 6651(a), (2) whether petitioner is liable for the accuracy-
related penalties under sec. 6662(a), and (3) whether respondent
is barred by the period of limitation under sec. 6501 from
assessing tax for the subject years. As to the first of these
issues, we hold for petitioner on the basis of our finding that
he filed his 1994 return timely. As to the other two issues, we
(continued...)
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