Kligfeld Holdings, Kligfeld Corporation, Tax Matters Partner - Page 20

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          706(a), which states as a general rule that a partner’s inclusion           
          of income, loss, deductions, etc., “with respect to a partnership           
          shall be based on the income, gain, loss, deduction, or credit of           
          the partnership for any taxable year of the partnership ending              
          within or with the taxable year of the partner.”  (Emphasis                 
          added.)  He then applies this rule to the “principle of fixed,              
          periodic accountings” and draws the conclusion that a “statute of           
          limitations for assessment of tax liability” makes sense only               
          when there is an “interlacing of partners’ and partnerships’                
          taxable years.”                                                             
               The flaw in this argument is that it reads too much into               
          section 706(a).  That section doesn’t state a grand, overarching            
          principle that all partnership and affected items of a                      
          partnership’s taxable year must be reflected in a coinciding or             
          overlapping partner’s taxable year.  It governs only the                    
          inclusion of the partnership’s “income, gain, loss, deduction, or           
          credit of the partnership.”  Not all partnership items--and not             
          all affected items of the sort that are at issue in this case--             
          fall into one of those five categories.                                     
               Kligfeld then turns to section 6226(d)(1)(B), pointing out             
          that it says that a partner may not be a party to a TEFRA                   
          proceeding after the day on which “the period within which any              
          tax attributable to such partnership items may be assessed                  
          against that partner expired.”  The phrase “such partnership                

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Last modified: November 10, 2007