- 103 -
XV. Notices of Final Partnership Administrative Adjustment
A. SMP
On January 24, 2003, respondent issued Notices of Final
Partnership Administrative Adjustment (FPAAs) to SMP for its
taxable years ended December 31, 1997 and 1998.
For 1997, respondent disallowed SMP’s claimed long-term
capital loss of $147,486,000 on the 1997 sale of the $150 million
receivable. Respondent also disallowed SMP’s claimed short-term
capital loss of $11,647,367 and long-term capital loss of
$62,237,061 on the sales of its interests in Corona. Respondent
determined instead that SMP recognized long-term capital gain of
$2,514,000 on the sale of the receivable, and short-term capital
gain of $198,941 and long-term capital gain of $1,034,809 on the
sales of its interests in Corona.74
Respondent determined that, pursuant to section 6662(h), the
40-percent accuracy-related penalty for gross valuation
74 Respondent computed SMP’s short-term capital gain (STCG)
and long-term capital gain (LTCG) from the sales of its interests
in Corona as follows:
STCG LTCG Total
Amount realized ($248,700 cash +
$1,220,050 note) $236,763 $1,231,987 $1,468,750
Adjusted basis (($250,000 cash +
$0 basis in note)
(94-percent interest)) 37,822 197,178 235,000
Gain on sale of Corona interest 198,941 1,034,809 1,233,750
Page: Previous 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 NextLast modified: May 25, 2011