John C. Bedrosian and Judith D. Bedrosian - Page 7




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          proceeding is pending.  Id. at 528; Maxwell v. Commissioner,                
          supra at 788.                                                               
               The notice of deficiency was issued 11 days after the FPAA;            
          therefore the partnership proceeding was still pending.  See sec.           
          6226(b).  We must therefore decide whether any of the items                 
          giving rise to any part of the deficiencies in this case are                
          partnership items or affected items.                                        
               The parties are in agreement that all of the items for 1999            
          are either partnership items or affected items.  We agree.  As a            
          result, we do not have jurisdiction over those items because the            
          partnership proceeding was pending when the notice of deficiency            
          was issued.  See Maxwell v. Commissioner, supra at 788.                     
               For 2000, the parties are not in agreement as to the                   
          characterization of all of the items.  Respondent argues that the           
          claim on petitioners’ return for that year to an itemized                   
          deduction of $525,000 for legal, accounting, consulting, and                
          advisory fees related to Stone Canyon is an affected item because           
          the partnership was a sham.  Although the partnership did not pay           
          the fee, respondent argues that the deduction is nevertheless an            
          affected item because the disallowance is dependent on the                  
          partnership’s being a sham.  In Goldberg v. Commissioner, T.C.              
          Memo. 2007-81, we held that such fees were neither a partnership            
          item nor an affected item, and therefore we retained jurisdiction           
          over them.  The deduction was not claimed on the partnership                







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