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Kligfelds’ 2000 personal return reported affected items that
relate back to the partnership’s 1999 taxable year--i.e., the
computation of Kligfeld’s (and Corporation’s) outside basis which
then became the adjusted basis of the Inktomi stock distributed
and sold in 2000--the limitations period for making partnership
adjustments is still open.
Discussion
Holdings 1 and Holdings 2 were both partnerships under
TEFRA--the Tax Equity and Fiscal Responsibility Act of 1982, Pub.
L. 97-248, 96 Stat. 324. TEFRA partnerships are subject to
special tax and audit rules. See secs. 6221-6234. Each TEFRA
partnership, for example, is supposed to designate a tax matters
partner (the TMP), to handle the partnership’s administrative
issues with the IRS and any resulting litigation. (Corporation
is the TMP for Holdings 2.)16 TEFRA aims at determining all
partnership items--technically defined in section 6231(a)(3)--at
the partnership level; the goal is to have a single point of
adjustment for the IRS rather than having to make separate
partnership item adjustments on each partner’s individual return.
See H. Conf. Rept. 97-760, at 599-601 (1982), 1982-2 C.B. 600,
662-63. If the IRS decides to adjust any partnership items on a
16 Corporation, as TMP, is the petitioner in this case.
References to “Kligfeld’s arguments,” “Kligfeld’s position,” and
so forth are technically references to Corporation in this
capacity.
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Last modified: November 10, 2007