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the FPAA was issued, more than three years had passed since that
partnership filed its 1999 tax return. The Commissioner says
that it doesn’t matter--the three-year restriction is only on
assessments, not on adjustments. Kligfeld’s partnership has
moved for summary judgment, arguing that three years means three
years and the Commissioner’s FPAA was too late.
Background2
This case is one battle in the Commissioner’s war against an
alleged tax shelter called Son-of-BOSS.3 Son-of-BOSS is a
variation of a slightly older alleged tax shelter known as BOSS,
an acronym for “bond and options sales strategy.” There are a
number of different types of Son-of-BOSS transactions, but what
they all have in common is the transfer of assets encumbered by
significant liabilities to a partnership, with the goal of
increasing basis in that partnership. The liabilities are
usually obligations to buy securities, and typically are not
completely fixed at the time of transfer. This may let the
partnership treat the liabilities as uncertain, which may let the
partnership ignore them in computing basis. If so, the result is
that the partners will have a basis in the partnership so great
2 It should be remembered that the facts described in this
section are meant to illuminate the summary judgment motion--
they have not been found to be true after a trial.
3 See also G-5 Inv. Pship. v. Commissioner, 128 T.C. ___
(2007).
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Last modified: November 10, 2007