Barry and Carolina Gustin - Page 10




                                       - 10 -                                         
               In the instant case, an FPAA was not issued and partnership-           
          level proceedings were not initiated.  Respondent has not                   
          proposed any adjustments to partnership items and agrees that he            
          is bound by the partnership’s determinations of partnership                 
          items.  Under those circumstances, the outcome at the partnership           
          level is acceptance of the partnership’s treatment of its                   
          partnership items, and a notice of deficiency regarding affected            
          items can be the basis for our jurisdiction.  See Roberts v.                
          Commissioner, 94 T.C. 853 (1990).                                           
               The seminal case in this area is Maxwell v. Commissioner, 87           
          T.C. 783 (1986).  In Maxwell, the potential for a duplication of            
          procedures prompted this Court to limit our jurisdiction over the           
          deficiencies relating to affected items:  “Affected items depend            
          on partnership level determinations, cannot be tried as part of             
          the personal tax case, and must await the outcome of the                    
          partnership proceeding.”  Id. at 792.  We have previously                   
          considered this language and have appropriately declined to                 
          afford it an interpretation that is broader than what was                   
          required for the disposition of the jurisdictional issue in that            
          case:                                                                       
                    Petitioners rely on our statement in Maxwell that                 
               “Affected items depend on partnership level                            
               determinations, [and] cannot be tried as part of the                   
               personal tax case, and must await the outcome of a                     
               partnership proceeding.”  Maxwell v. Commissioner,                     
               supra at 792.  Petitioners have taken that statement                   
               out of context.  In Maxwell, respondent had determined                 
               deficiencies and additions to tax by disallowing                       





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