William R. and Betty O. Bass - Page 12

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          published opinion 921 F.2d 280 (9th Cir. 1991); Viehweg v.                  
          Commissioner, 90 T.C. 1248, 1253-1255 (1988).                               
               Third, following up on an inquiry made by the Court to                 
          respondent’s counsel at the time of trial, petitioners assert               
          that section 7491(c) should impose on respondent the burden of              
          production with respect to the additions to tax in this case.               
          That section applies to examinations commenced after July 22,               
          1998.  Internal Revenue Service Restructuring and Reform Act of             
          1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 685, 727.                    
          Respondent contends that the affected items in this case are                
          merely a continuation of the proceeding commenced with respect to           
          the partnership long before the effective date of section                   
          7491(c).  Under the circumstances of this case, it is arguable              
          that an examination of petitioners’ return commenced after that             
          effective date, because, due to petitioners’ failure to attach a            
          Schedule K-1, the disallowed deductions were determined only                
          after examining petitioners’ Schedule C.  This is not the normal            
          proceeding in which adjustments based on the partnership                    
          proceeding and Schedules K-1 are automatically made and assessed            
          with respect to the individual partners.  We offer no opinion,              
          however, about whether the determination of additions to tax as             
          affected items resulting from a partnership examination is a                
          separate examination for purposes of the effective date of                  
          section 7491, and we need not decide whether the circumstances of           

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