Robert J. Goldberg and Bradley A. Morgan - Page 10




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          we retain jurisdiction regardless of whether TEFRA applies.                 
          Paragraph 4(g) of the petition assigned error to the adjustment             
          in paragraph 7 of the explanation of items in the notice of                 
          deficiency denying petitioners a deduction under section 183 or             
          section 212 for any legal, accounting, consulting, and advisory             
          fees for the taxable year 2001.  These items are neither                    
          partnership items nor affected items.  They were claimed by                 
          petitioners on their individual return, not by the partnership on           
          its partnership return.                                                     
               Respondent contends that the items referred to in paragraph            
          4(g) of petitioners’ petition are affected items.  Respondent               
          reasons that the deduction was disallowed because Alameda and the           
          partnership transaction at issue were shams, and that the                   
          determination of whether a partnership is a sham is a partnership           
          item.  Respondent cites River City Ranches #1 Ltd. v.                       
          Commissioner, 401 F.3d 1136, 1144 (9th Cir. 2005), affg. in part            
          and revg. in part T.C. Memo. 2003-150, and Andantech L.L.C. v.              
          Commissioner, 331 F.3d 972, 981 (D.C. Cir. 2003), affg. in part             
          and remanding T.C. Memo. 2002-97, to support his assertion.                 
               We find that River City Ranches, which dealt with the                  
          penalty-interest provision of section 6621(c), is                           
          distinguishable.  The issue of whether the partnership’s                    
          transactions were shams directly affected the penalty-interest              
          issue.  In this case, even if the Court were to determine that              







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