Michael V. Domulewicz and Mary Ann Domulewicz - Page 17




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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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