- 6 - partner who put up a greater share of the capital than his share of the partnership profits is to receive preferential distributions to equalize capital accounts.”) (citing Otey v. Commissioner, 70 T.C. 312, 321 (1978), affd. 634 F.2d 1046 (6th Cir. 1980)), affd. 963 F.2d 218 (8th Cir. 1992). Petitioner has not provided the strong proof necessary to vary the form in which his transaction with the corporation was cast. See Major v. Commissioner, supra. We therefore hold that petitioner and the corporation formed a partnership.2 Issue 2. Whether Petitioner’s Gross Income Includes a Distributive Share of PTSI’s Income For its taxable year 2002, PTSI filed a Form 1065, U.S. Return of Partnership Income, reporting income of $168,957. PTSI prepared a Schedule K-1, Partner’s Share of Income, Credits, Deductions, etc., reporting petitioner’s distributive share of this income as $8,448. Petitioner did not report that amount on his 2002 Federal income tax return. Respondent determined that 2 Secs. 6221 to 6234 were added by the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, Pub. L. 97-248, sec. 402(a) 96 Stat. 648, and provide for the determination of partnership items at the partnership, rather than at the individual partner, level. See Fargo v. Commissioner, T.C. Memo. 2004-13 n.1, affd. 447 F.3d 706 (9th Cir. 2006). In general, the TEFRA provisions do not apply to partnerships having 10 or fewer members unless the partnership otherwise elects. Sec. 6231(a)(1)(B). Because the partnership in question had fewer than 10 members and there is no indication it made such an election, the TEFRA provisions do not apply.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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