§6225 — Partnership adjustment by Secretary

The consequence ofany inconsistency bety een how a partner treats a partnership item on his return and how the partnership treats it on its return is that, unless the partner notifies the Secretary ofthe inconsistency, section 6225, which requires a partnership-level proceeding before assessment ofa deficiency, does not apply to computational adjustments necessary to bring the partner's treatment ofthe partnership items on his return into consistency with the partnership's treatment ofthe items

12 - section 6225(a) does not apply because the stipulation to be bound was an immediately enforceable contract and hence respondent could have assessed the .tax against petitioner when .the decision in Utah Jojoba I became final .

SSD or to file statements identifying the inconsistencies, respondent was entitled to make computational adjustments to conform petitioners' reporting ofthe guaranteed payment amounts with the Schedules K-1 issued by SSD, without having to initiate a partnership level proceeding with respect to SSD pursuant to section 6225.

SSD or to file statements identifying the inconsistencies, respondent was entitled to make computational adjustments to conform petitioners' reporting ofthe guaranteed payment amounts with the Schedules K-1 issued by SSD, without having to initiate a partnership level proceeding with respect to SSD pursuant to section 6225.

The consequence ofany inconsistency bety een how a partner treats a partnership item on his return and how the partnership treats it on its return is that, unless the partner notifies the Secretary ofthe inconsistency, section 6225, which requires a partnership-level proceeding before assessment ofa deficiency, does not apply to computational adjustments necessary to bring the partner's treatment ofthe partnership items on his return into consistency with the partnership's treatment ofthe items

computational adjustments within the meaning of section 6231(a)(6). Computational adjustments are not subject to the full panoply of restrictions on assessments that apply to an “assessment of a deficiency attributable to any partnership item” under section 6225. By way of example, which is not the case here, under section 6222(c), in the event of “any computational adjustment required to make the treatment of the items by * * * [a] partner consistent with the treatment of the items on the partn

ner . Gerald A. Thorpe and Paul R. Zamolo , for respondent . MEMORANDUM OPINION COHEN, Judge : This case is before us on respondent's motion to dismiss for lack of jurisdiction on the ground that the notice of deficiency is invalid and prohibited by section 6225 . Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue . SERVED D EC 1 1 2006 16 - 2 - Background Petitioner resided in San Francisco, California, at the time that he filed h

On December 7, 2001, this Court granted respondent’s motion to dismiss for lack of jurisdiction and to strike the portion of the partner-level proceeding relating to partnership items on the ground that respondent had sent petitioner, pursuant to section 6225, a notice of deficiency prior to the completion of the partnership- level proceeding.

Moreover, because the tax treatment of an “affected item” depends upon the partnership-level determination, affected items generally cannot be tried as part of a partner’s tax case prior to the completion of the partnership-level proceeding. E.g., Dubin v. Commissioner 99 T.C. 325, 328 (1992). Accordingly, if the items at issue in this c

An affected item is “any item to the extent such item is affected by a partnership item.” § 6231(a)(5). If an adjustment is merely computational and does not require partner-level factual determinations, the IRS may assess the computational adjustment without issuing a notice of deficiency. See §§ 6230(a)(1), 6231(a)(6); Treas.

However, ifa partner who adopts an inconsistent treatment fails - 17 - [*17] to notify the IRS as required by section 6222(b), "section 6225 shall not apply to any part ofa deficiency attributable to any computational adjustment required to make the treatment * * * by such partner consistent with the treatment ofthe items on the partnership return." Sec.

As recognized in Rule 55, however, these exceptions allow this Court to restrain as- sessment or collection ofa tax "only where a timely petition has been filed with the Court." For example, section 6225 authorizes the Court to enjoin the prema- ture assessment of"a deficiency attributable to any partnership item" but only if"a timely petition for a readjustment ofthe partnership items for the taxable year has been filed and then only in respect ofthe adjustments that are the subject ofsuch peti

As recognized in Rule 55, however, these exceptions allow this Court to restrain as- sessment or collection ofa tax "only where a timely petition has been filed with the Court." For example, section 6225 authorizes the Court to enjoin the prema- ture assessment of"a deficiency attributable to any partnership item" but only if"a timely petition for a readjustment ofthe partnership items for the taxable year has been filed and then only in respect ofthe adjustments that are the subject ofsuch peti

As recognized in Rule 55, however, these exceptions allow this Court to restrain as- sessment or collection ofa tax "only where a timely petition has been filed with the Court." For example, section 6225 authorizes the Court to enjoin the prema- ture assessment of"a deficiency attributable to any partnership item" but only if"a timely petition for a readjustment ofthe partnership items for the taxable year has been filed and then only in respect ofthe adjustments that are the subject ofsuch peti

And our dismissal ofthe partnership proceeding for lack ofa timely filed petition prevents us in a partner-level proceeding from upsetting the FPAA adjustments. See sec. 6226(h) (providing that ifa petition challenging the adjustments in an FPAA is dismissed, "the decision ofthe court dismissing the action shall be considered as its deci

And our dismissal of the partnership proceeding for lack of a timely filed petition prevents us in a partner-level proceeding from upsetting the FPAA adjustments. See sec. 6226(h) (providing that if a petition challenging the adjustments in an FPAA is dismissed, “the decision of the court dismissing the action shall be considered as its

return that respondent determined were correctlyreported."). -22- Computational adjustments are not, subje,ct to the full panoply ofrestrictions on assessments that apply to an "assessment o@a deficienby attributable:to any partnership item",under section 6225. By way,ofexarnple,.which is not the case here, under section 6223(g), in the,event of"any computational adjustment required to make the treatment ofthe items by * * * [a] partner consistent with the treatment ofthe items onjhe partnership

In GAF Corp. & Subs. v. Commissioner, 114 T.C. 519, 525 (2000), we had followed Maxwell v. Commissioner, 87 T.C. 783 (1986), and its progeny, to hold invalid an affected items notice ofdeficiency issued "prior to completion ofthe TEFRA partnership procedures". Assume arguendo .that an item required to be taken into account by the partner

In GAF Corp. & Subs. v. Commissioner, 114 T.C. 519, 525 (2000), we had followed Maxwell v. Commissioner, 87 T.C. 783 (1986), and its progeny, to hold invalid an affected items notice of deficiency issued “prior to completion of the TEFRA partnership procedures”. Assume arguendo that an item required to be taken into account by the partne

After the restrictions on assessment and collection under section 6225 no longer apply, the Commissioner is authorized to make computational adjustments to the partners' tax liabilities to reflect the adjustment of partnership items in the partnership-level proceeding.

After the restrictions on assessment and collection under section 6225 no longer apply, the Commissioner is authorized to make computational adjustments to the partners’ tax liabilities to reflect the adjustment of partnership items in the partnership-level proceeding.

Under section 6225 ( a)(2), respondent was restricted from assessing deficiencies attributable, to the jpartnership item adjustments set forth in the Greenwich! ~stipulation until April 17, 2002, the .day the Court's decision II belcame final .24 Under section 6229(d), respondent's January 27, 12003,,~.kjassessment is timely because it occurred within l;

Where, as here, the Commissioner has opted not to commence within the normal period of limitations a partnership-level proceedin g as to an entity subject to TEFRA, section 6225( a) serves as no restriction on the time within that period when-the Commission e may issue an NOD related to the partnership .

Thus, to answer the question these motions present is to answer a hypothetical question. Generally, when a court answers a question unnecessarily, its opinion is at best advisory. I would deny both motions as at this time beyond the authority of the Court. Therefore, I respectfully dissent. Foley and Holmes, JJ., agree with this dissenti

s . John Mark Colvin, for petitioner . Thomas D. Greenaway, for respondent . OPINION COHEN, Judge : This case is before us on respondent's motion to dismiss for lack of jurisdiction on the ground the notice of deficiency is invalid and prohibited by section 6225 . Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue . Background The parties stipulated certain facts solely for our action on respondent's motion to dismiss for lack of j

incurred, and if incurred, are deductible under any provision of the Internal Revenue Code . On September 14, 2006, respondent moved to dismiss the case herein for lack of jurisdiction upon the ground that the notice of deficiency was invalid under section 6225 . On November 3, 2006, petitioners notified the Court that they did not object to respondent's motion . On November 14, 2006, the Court issued an order to the parties requesting responses, via a written status report, to the following : (

--- MAJORITY --- OPINION Cohen, Judge: This case is before us on respondent’s motion to dismiss for lack of jurisdiction on the ground the notice of deficiency is invalid and prohibited by section 6225. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue. Background The parties stipulated certain facts solely for our action on respondent’s motion to dismiss for lack of jurisdiction. Peter D. Adkison (petitioner) resided in Seattle,

For purposes of sections 6221 through 6234, a partnership is defined by section 6231(a)(1)(A) to mean in general "any partnership required to file a return under section 6031(a)." Section 6231(a)(1) (:B)(i) provides an exception to the definition of a "partnership" for·small partnerships. The term "partnership" for this purpose does not

6225, I.R.C.” - 14 - partnership proceeding.” Maxwell v. Commissioner, supra at 788. (Emphasis added.) We further explained that under the rules of the Tax Court “[this] ‘Court does not have jurisdiction of a partnership action’ if no FPAA has been issued.” Maxwell v. Commissioner, supra at 788. Because no FPAA had been issued to the partners

A “deficiency” for purposes of sec. 6225 means the excess of tax due over the amount shown on the original return plus any additional amount shown as tax on an amended return, “other than amounts of additional tax which such return clearly indicates the taxpayer is protesting rather than admitting.” Sec. 301.6211-1(a), Proced. & Admin. R

A “deficiency” for purposes of sec. 6225 means the excess of tax due over the amount shown on the original return plus any additional amount shown as tax on an amended return, “other than amounts of additional tax which such return clearly indicates the taxpayer is protesting rather than admitting.” Sec. 301.6211-l(a), Proced. & Admin. R