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not give effect to the allocation of profits and losses
contained in the Partnership Agreement, * * *, (e) the
risk that an audit of the Partnership’s income tax
return may result in an audit of a Limited Partners’
own individual tax return * * *.
* * * * * * *
The income tax returns of the Partnership may be
audited, and in turn, such audit may result in the
audit of the returns of each Partner. In addition, the
Commissioner of Internal Revenue has announced that the
Service is engaged in a program of intensified audits
of partnerships. Various deductions claimed by the
Partnership on its returns of income could be
disallowed in whole or in part on audit, which would
result in an increase in the taxable income of the
Partnership, and in turn, each Partner.
If a tax deficiency is determined, the taxpayer is
liable for interest (compounded on a daily basis) on
such deficiency from the due date of the return.
* * * * * * *
BASED ON THE INVESTMENT OBJECTIVES OF THE PARTNERSHIP,
THE GENERAL PARTNERS BELIEVE THAT THERE ARE SUBSTANTIAL
GROUNDS FOR ARGUING THAT THE PARTNERSHIP IS NOT A “TAX
SHELTER.” HOWEVER, NO ASSURANCE CAN BE GIVEN THAT THE
IRS WILL NOT ATTEMPT TO CLASSIFY THE PARTNERSHIP AS A
TAX SHELTER NOR WHETHER SUCH ATTEMPT WOULD BE
SUCCESSFUL.
* * * * * * *
THE FOREGOING ANALYSIS CANNOT BE, AND IS NOT INTENDED
AS, A SUBSTITUTE FOR CAREFUL TAX PLANNING,
ACCORDINGLY, PARTNERS ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THEIR TAX SITUATION AND THE
EFFECTS OF OWNING PARTNERSHIP UNITS.
Tax Returns
Petitioner and Mr. Bartak filed joint Federal income tax
returns for 1980, 1981, 1982, 1983, 1984, 1985, and 1986. For
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Last modified: May 25, 2011