Victor Grigoraci and Judith A. Grigoraci, et al. - Page 17




                                         17                                           
               Additionally, the determination of whether the corporation             
          before us should be respected for Federal tax purposes has no               
          impact on the partnerships, their books and records, or any other           
          aspect of the partnerships.  The determination also has no impact           
          upon the amount or character of a distribution, or percentage of            
          the other partners’ interests in the partnerships.  The                     
          determinations’ sole impact is on the liability for self-                   
          employment tax and related penalties.  A determination of the               
          identity of the partners in GTWP and TWA is not a partnership               
          item under this section of the regulations.                                 
               There are circumstances in which the determination of the              
          status of a partner is a partnership item.  In Blonien v.                   
          Commissioner, 118 T.C. 541 (2002), for example, we held that a              
          determination that an individual was a partner in a partnership             
          was a partnership item because such determination affected the              
          distributive shares of the other partners.  See also Oceanic                
          Leasing v. Commissioner, T.C. Memo. 1996-458.  A determination of           
          this nature is more appropriately made at the partnership level             
          because it alters the number of partners and decreases the                  
          distributive shares of the other partners.  Conversely,                     
          resolution of the issue in this case does not change the number             
          of partners, their allocable shares, or in any way affect the               
          partnership or the other partners.                                          
               Under the circumstances of this case, we hold that a                   
          determination that the partners of record were not the true and             




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