Alan H. Ginsburg and Estate of Harriet F. Ginsburg, Deceased, Alan H. Ginsburg, Personal Representative - Page 8

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          the partnership tax return.  Maxwell v. Commissioner, supra at              
          790; sec. 301.6231(a)(3)-1(a)(1)(i), Proced. & Admin. Regs.                 
               Section 6231(a)(4) defines the term “nonpartnership item” as           
          “an item which is (or is treated as) not a partnership item.”               
          Section 6231(a)(5) provides that the term “affected item” means             
          “any item to the extent such item is affected by a partnership              
          item.”  An affected item is by definition neither a partnership             
          item nor a subchapter S item.  Dial USA, Inc. v. Commissioner, 95           
          T.C. 1, 5 (1990).  An affected item, rather than being                      
          universally applicable to every partner, is peculiar to a                   
          particular partner’s tax posture.  Maxwell v. Commissioner, supra           
          at 790.                                                                     
               Petitioners argue that the notice of deficiency shows that             
          respondent has adjusted partnership items reflected in the 1995             
          tax return of UK Lotto.  Respondent maintains the items adjusted            
          in the notice of deficiency were not partnership items but                  
          affected items that were ultimately disallowed on petitioners’              
          tax returns for reasons that were unique to petitioners’                    
               The notice of deficiency potentially disallows the loss on             
          three levels:  The partnership level, the S corporation level,              
          and the individual partner level.  We will address the parties’             
          arguments in the context of each level.                                     

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