-9-
Regs., 52 Fed. Reg. 6789 (Mar. 5, 1987); McKnight v.
Commissioner, 99 T.C. 180, 184-86 (1992), affd. 7 F.3d 447 (5th
Cir. 1993). And the Commissioner agrees with him that the
$12,850 entry for health insurance premiums that JTA listed under
“guaranteed payments” would not have been enough to make JTA a
TEFRA partnership.
But the Commissioner defends his determination by pointing
to the $12,850 deduction that JTA took under the heading “other
deductions.” Under the old regulations, a partnership’s
deductions were generally subject to the same-share rule. See
sec. 301.6231(a)(3)-1(a)(1)(i), Proced. & Admin. Regs. Nehrlich
counters by arguing that health insurance premiums are always
“guaranteed payments,” no matter how they are listed on a
partnership return, and that the Commissioner should have
recognized the premiums as “guaranteed payments” before picking
which set of procedures to follow.7 The Commissioner’s failure
to spot JTA’s mistake in reporting the premiums as a deduction,
he concludes, led to the mistaken issuance of an FPAA instead of
a notice of deficiency, and so fatally undermined the assessment
against him.
7 Nehrlich mentions that the health insurance premiums are
affected items but he doesn’t argue the point with any
specificity. “Affected items” are those that are affected by
adjustments to partnership items, sec. 6231(a)(5), and we can’t
see how the Commissioner’s one partnership-level adjustment--
disallowing JTA’s charitable deduction--affected JTA’s health
insurance premiums.
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