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that such a factual determination was not required. We disagree.
As to DII’s sale of the stock distributed by DIP, respondent
determined in the FPAA only the partnership item components of
any resulting assessment; respondent was required to make further
partner-level factual determinations as to any such assessment.
The claimed long-term capital loss reportedly passed from DII to
petitioner and resulted from DII’s sale of INVI stock.
Respondent needed to determine, among other things, whether the
stock that was the subject of the sale was the same stock
distributed by DIP, the portion of the stock actually sold, the
holding period for the stock, and the character of any gain or
loss. The fact that these partner-level determinations, once
made, may not have changed respondent’s partnership
determinations as to DIP is of no concern. Neither the Code nor
the regulations thereunder require that partner-level
determinations actually result in a substantive change to a
determination made at the partnership level.
Nor did the FPAA definitively determine the outside basis of
any DIP partner. Thus, when a partner-level determination is
required to determine a partner’s basis, the deficiency
procedures apply although the determination may or may not
actually alter the final result.13 See Dial USA v. Commissioner,
13 We note, however, that respondent in the FPAA made
several partnership-item determinations that the partners were
(continued...)
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