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period should be disregarded and all income and deductions for that
period should be reported in Andantech’s 12/31/93 short period. In
the 12/10/93 FPAA, respondent determined that the $86,930,096
income reported should be reduced to zero for the 12/10/93 short
period. In the 12/31/93 FPAA, respondent determined that Andantech
should have reported income of $87,805,801, rather than the
$2,143,937 loss. Respondent increased the gross income for the
sale of the receivable and disallowed all the claimed deductions.
Included with each copy of the 12/10/93 FPAA and the 12/31/93
FPAA was a letter advising each person of his or its right to elect
to have partnership items treated as nonpartnership items pursuant
to section 6223(e). Neither Mr. Parmentier, Mr. de la Barre
d’Erquelinnes, NEFI, RD Leasing, Norwest, nor EICI filed such an
election.
On April 17, 2000, NEFI and Norwest timely filed a petition
for Andantech’s 12/31/93 short period (docket No. 4277-00). On
June 6, 2000, EICI timely filed a petition for Andantech’s 12/10/93
short period (docket No. 6348-00).
B. FPAA for the 1994 Taxable Year
On June 19, 1998, respondent issued an FPAA with regard to
Andantech’s 1994 tax year (the 1994 FPAA). Respondent determined
in the 1994 FPAA that $50,069,397 of deductions claimed by
Andantech should be disallowed. Alternatively, respondent
determined in the 1994 FPAA that the “sale” of the lease receivable
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