Barry and Carolina Gustin - Page 1

                                 T.C. Memo. 2002-64                                   

                               UNITED STATES TAX COURT                                

                  BARRY GUSTIN AND CAROLINA GUSTIN, Petitioners v.                    
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 5192-01.               Filed March 7, 2002.                 

                    R disallowed certain losses claimed by Ps from                    
               various partnerships in tax years 1997, 1998, and 1999.                
               R determined that P-H’s basis in each of the                           
               partnerships was limited to P-H’s cash contributions,                  
               which did not include P-H’s contributions of                           
               subscription notes.  R applied sec. 704(d), I.R.C., and                
               disallowed losses which exceeded P-H’s adjusted bases                  
               in the partnerships.                                                   
                    The partnerships involved are subject to the                      
               unified partnership procedures contained in secs. 6221-                
               6234, I.R.C.  R has begun a partnership-level                          
               examination of two partnerships for which Ps claimed                   
               losses in 1998 and 1999.  However, R did not initiate a                
               partnership-level examination of the partnership for                   
               which Ps claimed a loss in 1997.  The normal period of                 
               limitations for making partnership-level adjustments                   
               regarding 1997 expired, and R agrees that he is bound                  
               by the partnership’s treatment of partnership items.                   

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