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contributions. Accordingly, the IRS increased PKVI LP’s ordinary
income by $100,661 for 1991.
The IRS determined that the cash transfers that had been
made by PK Ventures and/or its subsidiaries to PKVI LP were made
on behalf of the Roses and that the transfers constituted
constructive dividends to them. After making certain
concessions, the IRS determined that the Roses should have
reported a constructive dividend of $411,338 on their joint
income tax return for 1990 and a constructive dividend of
$293,997 on their joint income tax return for 1991. Accordingly,
the IRS increased the Roses’ taxable income by $411,338 for 1990
and by $293,997 for 1991.
The IRS notified the Roses that, with respect to 1991,
PKVI LP was subject to partnership-level proceedings pursuant to
the partnership audit and litigation procedures of sections 6221
through 6233. Consequently, the IRS removed the amount that the
Roses had reported as their distributive share of PKVI LP’s
cancellation of indebtedness income from their income for that
year. The IRS made these adjustments pursuant to Munro v.
Commissioner, 92 T.C. 71 (1989).
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