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Steven Ray Mather and Elliott Hugh Kajan, for petitioners.
Lloyd T. Silverzweig, for respondent.
OPINION
COHEN, Judge: In a Notice of Final Partnership
Administrative Adjustment (FPAA) sent October 4, 2005, respondent
determined that Bakersfield Energy Partners, LP (BEP), had
overstated its basis in certain gas reserves sold during the
taxable year 1998, thus causing an understatement of partnership
income by more than 25 percent of the amount stated in the
return. The issue for decision is whether, under those
circumstances, the overstatement of basis constitutes an omission
of income giving rise to an extended 6-year period of
limitations. This issue has been presented by petitioners’
motion for summary judgment and respondent’s motion for partial
summary judgment. Unless otherwise indicated, all section
references are to the Internal Revenue Code in effect for the
year in issue.
Background
For purposes of the pending motions, the following facts
have been assumed. The petitioning partners are all partners in
BEP. BEP’s principal place of business was in California at the
time the petition was filed. Prior to April 1, 1998, BEP owned
an interest in an oil and gas property with Harcor, an unrelated
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