T.C. Memo. 2005-174
UNITED STATES TAX COURT
OLSEN-SMITH, LTD., SMITH-OLSEN, PLC,
TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22081-03. Filed July 18, 2005.
L is a general partnership the direct partners of
which are three limited liability companies (LLCs). P
amended its petition in this TEFRA partnership-level
proceeding to allege that L’s net earnings from self-
employment (NESE) were zero instead of $627,736 as
reported or $696,807 as determined by R. P argues that
L has no “NESE”, as defined in sec. 1402(a), I.R.C.,
because neither L nor any of its partners has a partner
or member who is an individual. R moves to strike P’s
allegation, asserting that the Court lacks jurisdiction
in this proceeding to decide whether L has an indirect
partner who is an individual.
Held: Because a determination of the ownership of
a passthrough entity that is a direct partner in a
partnership may involve information not usually
maintained by the partnership, a determination of the
members of the LLCs (and thus indirect partners of L)
is a nonpartnership item that the Court is not allowed
to decide in this TEFRA partnership-level proceeding.
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