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On April 18, 1990, petitioner was released from liability
relating to the loan. On October 11, 1990, Smith and Fowler
filed with the Florida Department of State a Certificate of
Amendment To Limited Partnership removing petitioner as general
and limited partner.
The partnership issued petitioner Schedules K-1 (Form 1065,
Partner’s Share of Income, Credits, Deductions, Etc.), which
reflected petitioner's distributive share of partnership items,
relating to 1989 and 1990. Petitioner, however, excluded such
items after January 12, 1989, from his Federal income tax returns
for those years. On June 27, 1994, respondent sent an FPAA,
relating to 1989 and 1990, to Smith as tax matters partner of the
partnership. Smith did not file a petition for readjustment of
partnership items pursuant to section 6226(a). On August 8,
1994, respondent sent an FPAA, relating to 1989 and 1990, to
petitioner, which determined that petitioner transferred
ownership in the partnership on June 30, 1990, rather than
January 12, 1989, and that he was, therefore, a partner whose
distributive share included partnership income accrued through
June 30, 1990.
Respondent also determined that petitioner was liable for
the income tax accrued through June 30, 1990, on his pro rata
share of FMS and the management company’s income. Following
respondent’s determination, petitioner paid the income taxes
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