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liability for years which are still open. Sec. 6214(b); Hill v.
Commissioner, 95 T.C. 437, 445-446 (1990); Calumet Indus., Inc.
v. Commissioner, 95 T.C. 257, 276-277 (1990) (the Commissioner
may recompute the amount of a taxpayer’s loss for a source year
closed under the period of limitations to determine whether a net
operating loss was incurred, and, if so, the amount available in
a year open under the period of limitations); Mennuto v.
Commissioner, 56 T.C. 910, 922-923 (1971) (the statute of
limitations does not prevent the recomputation of the investment
tax credit carryover from a barred year in order to determine the
tax due for an open year). The critical element is that the
deficiency being determined be for a year on which the period of
limitations has not run.
Although the rule, which allows the review of a year closed
by the period of limitations to adjust or recompute items that
would cause a tax liability in an open year, pertains to
deficiency proceedings, there is no TEFRA partnership provision
that precludes extending this rule to partnership proceedings.
Petitioners offer no reason the same rule should not apply to the
assessment of a tax liability arising from a TEFRA partnership
proceeding. The Court has jurisdiction to determine all
partnership items for the taxable year to which the FPAA relates
and the proper allocation of such items among the partners. Sec.
6226(f). Therefore, after the Court’s decision in this TEFRA
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Last modified: November 10, 2007