Peter M. and Susan L. Hoffman - Page 15

          Subs. v. Commissioner, 101 T.C. 294, 299 n.7 (1993).  Section               
          6501(e)(1)(A)(i) provides a special definition of gross income in           
          the context of a trade or business.  That section provides that             
          as applied to a trade or business, “gross income” includes the              
          total of the amounts received or accrued from the sale of goods             
          or services before diminution by the cost of those sales or                 
          services.  Sec. 6501(e)(1)(A)(i).  With regard to a taxpayer-               
          partner, we have interpreted this provision as requiring that a             
          taxpayer’s gross income include her share of the partnership’s              
          gross receipts from the sale of goods or services.  Harlan v.               
          Commissioner, 116 T.C. 31 (2001); Estate of Klein v.                        
          Commissioner, 63 T.C. 585, 591 n.6 (1975), affd. 537 F.2d 701               
          (2d Cir. 1976).  In essence, the taxpayer-partner’s share of the            
          partnership’s gross receipts is used in determining total gross             
          income of the taxpayer, the denominator in our calculation.                 
               Here, respondent argues that petitioners’ interests in the             
          six partnerships do not implicate section 6501(e)(1)(A)(i).                 
          According to respondent, if the partner did not actively                    
          participate in the partnership, the partner is not engaged in a             
          trade or business, and the “gross receipts” definition of section           
          6501(e)(1)(A)(i) is not implicated.  Thus, respondent contends,             
          the general meaning of gross income should apply, and only the              
          taxpayer-partner’s share of income from the partnership that was            
          already included in the taxpayer-partner’s return is included in            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011