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partners” and the second was on the line labeled “other
deductions.” JTA identified both these items, in separate
statements attached to its return, as “Health Insurance
Premiums.” Nehrlich agrees with the Commissioner that the double
reporting of the premiums was simply a mistake.
The Commissioner audited JTA's 1995 partnership return using
TEFRA audit procedures, not because one of the partners had
designated himself the TMP and the partnership return had a
checked box stating that TEFRA procedures would apply, but
because the examiner noticed that JTA allocated one item--the
$12,850 in health insurance premiums listed under “other
deductions”--other than in equal thirds.2 The focus of the
audit, though, was the value of JTA’s gift to the University of
Iowa. The Commissioner concluded the software was worthless, and
made a $6 million adjustment. At the end of the audit, in
October 2000, the Commissioner sent Wypychowski a Notice of Final
Partnership Administrative Adjustment (FPAA) by certified mail.
The Commissioner alleges that he also mailed an FPAA to Nehrlich,
and offers as evidence the first page of an FPAA and a certified
mailing list showing Nehrlich’s name and address. However, he
stipulated that he cannot prove Nehrlich received the FPAA, and
Nehrlich claims that he did not.
2 Nehrlich was allocated $2405; Wypychowski, $3111; and Yee,
$7334.
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Last modified: November 10, 2007