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Daniel J. Leer, for petitioner.
John A. Guarnieri, Meso T. Hammoud, and S. Katy Lin, for
respondent.
OPINION
HOLMES, Judge: Marnin Kligfeld contributed a large block of
Inktomi Corp. stock to a partnership in 1999. The stock was
shuttled from one partnership to another, theoretically gaining a
greatly increased basis along the way. Most of this stock was
sold in 1999. In 2000, the second partnership distributed the
remaining stock with its allegedly increased basis along with the
cash proceeds from the 1999 sale. Kligfeld sold the leftover
stock and reported the sale on his 2000 joint return.1 The
Commissioner challenges the amount of capital gains Kligfeld and
Estrin reported on their joint return, but does so by attacking
their reported basis. To do this, he issued a notice of final
partnership administrative adjustment (FPAA) which adjusted items
on a 1999 partnership return. The problem is that by the time
1 Kligfeld and his wife, Margo Estrin, are both parties in a
separate, but related, petition before this court regarding their
2000 tax return. Estrin is included in that petition and is
mentioned in this opinion only because she and Kligfeld filed
jointly. Although she and two other family members together
owned one percent of Kligfeld Holdings in 2000, Kligfeld is the
sole shareholder for Kligfeld Corporation, the tax matters
partner in this case, and he and Kligfeld Corporation were the
only partners in Kligfeld Holdings during the 1999 taxable year.
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