- 14 -
On December 17, 1999, respondent sent petitioners an
affected items notice of deficiency, determining a deficiency of
$11,826 for the year ended 1992; the basis for the deficiency was
Mr. Blonien’s distributive share of Finley Kumble’s COD income in
the amount of $36,3324 and a phaseout of itemized deductions
under section 68 of $1,817 resulting from the additional Finley
Kumble income.5 This amount of COD income is $880 less than Mr.
Blonien’s distributive share of Finley Kumble’s COD income shown
on the Schedule K-1 that Mr. Blonien received from Finley Kumble.
It appears that, in issuing the notice, respondent did not give
petitioners credit for the $2,000 of Finley Kumble COD income
reported on page 1 of their 1992 return. It does not appear that
respondent made adjustments to petitioners’ tax liability for the
other items reported to Mr. Blonien on the Finley Kumble Schedule
K-1 and in the FPAA.
4Presumably, respondent used the “affected items” procedure
to enable Mr. Blonien and other Finley Kumble partners to claim
that they need not recognize their respective shares of Finley
Kumble’s COD income, to the extent of their own insolvency.
Sec. 108(a)(1)(B), (d)(6); see Overstreet v. Commissioner, T.C.
Memo. 2001-13, affd. in part and dismissed in part 33 Fed. Appx.
349 (9th Cir. 2002). Petitioners did not claim in their petition
that they were insolvent.
5In issuing the notice, respondent did not respond to the
invitation in sec. 6222(d) to determine an accuracy-related
penalty against petitioners under sec. 6662(a) for taking a
position on their individual return inconsistent with the
position taken by Finley Kumble on its partnership return without
filing Form 8082 or otherwise explaining the basis for the
inconsistency.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011