Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 190

                                        -263-                                         
                                                                                     
          The Treasury regulation interpreting this section provides:                 
               A court reviewing a notice of final partnership                        
               administrative adjustment has jurisdiction to determine                
               all partnership items for the taxable year to which the                
               notice relates and the proper allocation of such items                 
               among the partners.  Thus, the review is not limited to                
               the items adjusted in the notice.  [Sec. 301.6226(f)-                  
               1T(a), Temporary Proced. & Admin. Regs., 52 Fed. Reg.                  
               6779-01 (Mar. 5, 1987).185]                                            
               On the basis of section 6226(f) and the applicable                     
          regulation, we could construe our jurisdiction over petitioner’s            
          1997 and 1998 taxable years to encompass SMP’s reporting of its             
          basis in SMHC stock.  Nonetheless, if we were to exercise                   
          jurisdiction over this item, and if we were to decide, as                   
          respondent contends, that SMP’s basis in SMHC is zero, our                  
          decision would result in no real tax adjustments at either the              
          partnership or partner level for the partnership taxable years at           
          issue.186  Conceivably, our decision might influence SMP’s                  
          reporting for subsequent taxable years, but beyond this “in                 
          terrorem” effect, it is unclear what impact such a decision would           

               185 A final regulation under sec. 6226 was promulgated                 
          effective for partnership taxable years beginning on or after               
          Oct. 4, 2001.  Sec. 301.6226(f)-1(c), Proced. & Admin. Regs.                
               186 Unlike River City Ranches #1 Ltd. v. Commissioner, 401             
          F.3d 1136 (9th Cir. 2005), affg. in  part, revg. in part, and               
          remanding T.C. Memo. 2003-150, this is not a case where our                 
          findings with respect to this matter are alleged to have any                
          bearing on penalty-interest under sec. 6621 or on any other                 
          penalties.  For instance, respondent has not alleged that an                
          adjustment to SMP’s reported basis in SMHC stock would give rise            
          to any underpayment for purposes of sec. 6662 accuracy-related              
          penalties.                                                                  





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