§702 — Income and credits of partner

3Notwithstanding, we hold that the depreciation expense claimed on line 13 of Schedule C for 2006 and the charitable contribution expense claimed on line 27 of Schedules C for 2005 and 2006 are allowed because they are flow-through partnership items under.

In pertinent part, APA section 702 provides: “A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action - 17 - within the meaning of a relevant statute, is entitled to judicial review thereof.” In full, APA section 703 provides: The form of proceeding for judicial review is the special stat

e partners requires a determination of each partner’s share of such items. In general, such shares will be determined in accordance with the partnership agreement as under existing practice. The report goes on to state as follows, id. at A221, A222: Section 702. Income and credits of partner This provision represents no change in current law and practice. It incorporates provisions of sections 182, 183(c), 184, 186, and 189 of present law. * * * * * * Subsection (c) makes clear that, whenever th

as having directly contributed the property, section 702(b) - 18 - provides that "[t]he character ofany item ofincome, gain, loss, deduction, or credit included in a partner's distributive share under paragraphs (1) through (7) of subsection (a) [ofsec. 702] shall be determined as ifsuch item were realized directly from the source from which realized by the partnership, or incurred in the same manner as incurred by the partnership." Browning Creek was not in the business offarming; it was in the

1.702-1(a), Income Tax Regs. Or to put it another way, a partner is taxable on his or her distributive or proportionate shares of partnership income, irrespective of whether that income is actually distributed to him or her. United States v. Basye, 410 U.S. 441, 447-8, 454 (1973); Cipparone v. Commissioner, T.C. Memo. 1985-234. In th

In contrast, petitioners argue that the cashier's checks remained partnership property, belonging equally to petitioner and Carlton, and therefore, pursuant to section 702, only one-half of the funds is attributable to petitioners.

101 Codified as amended at 5 U.S.C. sec. 706 (2018). 102 Codified as amended at 5 U.S.C. sec. 706(2). 103 Codified as amended at 5 U.S.C. sec. 706(2)(A). 104 Codified as amended at 5 U.S.C. sec. 706(2)(C). 110 V. The lifting of the wartime suspension of the Federal Register Act requirement that regulations be codified every five y

ts, 461 U.S. 300, 307, 312-313 (1983). 14While partnerships usually do not pay income tax, sec. 701, the partnership’s taxable income is generally computed at the partnership level, sec. 703, and then reported as distributive shares by its partners, sec. 702. 15See Policy Holders Agency, Inc. v. Commissioner, 41 T.C. 44, 47 (1963). 16Cozzi v. Commissioner, 88 T.C. 435, 445 (1987). 17Cozzi v. Commissioner, 88 T.C. at 445 (citing United States v. S.S. White Dental Mfg. Co., 274 U.S. 398 (1927)); s

ts, 461 U.S. 300, 307, 312-313 (1983). 14While partnerships usually do not pay income tax, sec. 701, the partnership’s taxable income is generally computed at the partnership level, sec. 703, and then reported as distributive shares by its partners, sec. 702. 15See Policy Holders Agency, Inc. v. Commissioner, 41 T.C. 44, 47 (1963). 16Cozzi v. Commissioner, 88 T.C. 435, 445 (1987). 17Cozzi v. Commissioner, 88 T.C. at 445 (citing United States v. S.S. White Dental Mfg. Co., 274 U.S. 398 (1927)); s

Each partner is taxed on its distributive share ofpartnership income without regard to whether the income is actually distributed. Sec. 1.702-1(a), Income Tax Regs. Under these rules the upper tier CFC partners must include in their gross income their distributive shares ofEW LLC's income. Under section 951(a) EW LLC's income includes sub

From the date ofits incorporation Hopper Cyprus has been a CFC within the meaning of section 957(a).

- 7 - [*7] In computing the taxable income ofa partner for a taxable year, the inclusions required by section 702 * * * with respect to a partnership shall be based on the income, gain, loss, deduction, or credit ofthe partnershipfor any taxableyear ofthepartnership ending within or with the taxableyear ofthepartner.

as having directly contributed the property, section 702(b) - 18 - provides that "[t]he character ofany item ofincome, gain, loss, deduction, or credit included in a partner's distributive share under paragraphs (1) through (7) of subsection (a) [ofsec. 702] shall be determined as ifsuch item were realized directly from the source from which realized by the partnership, or incurred in the same manner as incurred by the partnership." Browning Creek was not in the business offarming; it was in the

702 ("Nothing herein * * * affects * * * the power or duty ofthe court to * * * deny reliefon any other appropriate legal or equitable ground". Thus, nothing in the APA affects the power ofthe Tax Court to deny a taxpayer in a deficiency case reliefon "other appropriate legal * * * ground[s]", including those outside the NOD that are raised pu

(Section 702 and its accompanying regulations provide rules to determine the income-tax liability ofa partner for his distributive share ofa partnership's income.) That regulation states that ifa husband and wife in a community-propertystate file separate returns, and only one spouse is a member 2° We are left with the vexing question ofwhatto do wi

(Section 702 and its accompanying regulations provide rules to determine the income-tax liability ofa partner for his distributive share ofa partnership's income.) That regulation states that ifa husband and wife in a community-propertystate file separate returns, and only one spouse is a member 2° We are left with the vexing question ofwhatto do wi

nd methods". Fed. R. Evid. 702(c). Expert witness testimony can be "reliable even though the expert's methodology is not generally accepted in her field." 3 Stephen A. Saltzburg, Michael M. Martin & Daniel J. Capra, Federal Rules ofEvidence Manual, sec. 702.02[5], at 702-19 (10th ed. 2011). Nevertheless, we need not rely on the unsupported opinion ofan expertwitness. Holman v. Commissioner, 130 T.C. 170, 213 (2008), aff'd, 601 F.3d 763 (8th Cir. 2010). Mr. Hanlon's deconstruction ofthe 15% Primo

ties for not properly reporting his income, so he reported the Schedule K-1 items on his 2007 Federal income tax return. The income allocated to petitioner for the taxable years 2006 and 2007 was calculated to represent his distributive shares under section 702. As a result,_ petitioner had to pay the tax associated with the income allocations out ofhis own pocket. Petitioner was unhappy with these substantial out-of-pocket expenses and spoke with the management ofDuke Ventures and the board ofC

706(a)("In computing the taxable income.ofa partner for a taxable year, the inclusions required by section 702 [for the partner's distributive shares] and section 707(c)[for the partner's guaranteed payments] with respect to a partnership shall be based on the income, gain, loss, deduction, or credit ofthe partnership for any taxable year ofthé partnership ending within or with the taxable year ofthe partner." (Emphasis supplied.)).7 7The emphas

Section 706(a) requires that, in computing the taxable income ofa partner for a taxable year ofthe partner, the inclusions required by section 702 (income and credits ofa partner) and section 707(c) (guaranteed payments) with respect to a partnership are to be based on the income, gain, loss, deduction, or credit ofthe partnership for any taxable year ofthe partnership that ends within or with the taxable year ofthe partner.

706(a) (“In computing the taxable income of a partner for a taxable year, the inclusions required by section 702 [for the partner’s distributive shares] and section 707(c) [for the partner’s guaranteed payments] 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 supplied.)).

In the notice of deficiency for 2001 respondent determined that petitioners -realized long-term capital gain from the sale of the 1312 Flint Street'property by QES .` Section 702 subjects a partner to tax on the partner's distributive share of partnership income when realized by the partnership regardless of whether that income is actually distributed to the partner .

. 8, sec. 155.1 (2001). 7 As professors Saltzburg, Martin, and Capra state: Expert witness testimony can be "reliable even though the expert's methodology is not generally accepted in her field." 3 Saltzburg et al., Federal Rules of Evidence Manual, sec. 702.02[5], at 702- 718 (9th ed. 2006). - 25 - EPCO, Inc. v. Commissioner, T.C. Memo. 1999-103 (report of expert not familiar with USPAP received into evidence but of little use to Court); Cheatle v. Katz, 2004 WL 906249 (E.D. Pa. 2004) (report o

4150. - 4 - approximately 1995 petitioner conducted her medical practice through various corporations including Letantia Bussell MD Inc. Mr. Bussell was a licensed physician specializing in anesthesiology until he became disabled in September 1992. I. Assessments for 1983, 1984, 1986, and 1987 The Bussells filed joint Forms 104

702 (2000) (“Nothing herein * * * confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.”). - 35 - within the meaning of APA section 559.3 See, e.g., Phillips v. Commissioner, 283 U.S. 589, 598, 600 (1931) (stating that in deficiency proceedings before the

702 (2000) (“Nothing herein * * * confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.”). When the APA was enacted, this Court had jurisdiction not only to redetermine deficiencies, but also to determine certain overpayments, to redetermine excessive profi

ss” language of section 62(a)(1) that applies to business owners, partners in firms, and independent contractors. The scope of section 62(a)(2)(A) is further restricted by section 62(c), as enacted by the Family Support Act of 1988, Pub. L. 100-485, sec. 702, 102 Stat. 2426, effective for tax years beginning after December 31, 1988. Under section 62(c)(1) and (2), an employee business expense will be treated as covered by a “reimbursement or other expense allowance arrangement” only if the emplo

e partners requires a determination of each partner's share of such items. In general, such shares will be determined in accordance with the partnership agreement as under existing practice. The report goes on to state as follows, id. at A221, A222: Section 702. Income and credits of partner This provision represents no change in current law and practice. It incorporates provisions of sections 182 183(c), 184, 186, and 189 of present law. * * * * * .* * ) - 23 - Subsection (c) makes clear that,

the pa'rtners require a determination of each partner's share of such items. n general, such shares will be determined in accordance ith the partnership agreement as under existing practice. The report goes on to state as follows, id ät A221, A222: Section 702. Income and credits of partner This provision represents no change in current law and practice. It incorporates provisions of sections 182, 183(c), 184, 186, and 189 of present law. * * * * * * * - 23 - Subsection (c) makes clear that, wh

erests are owned by each of the partners. Subchapter K of the Internal Revenue Code (Partners and Partnerships) blends both approaches. In certain areas, the aggregate approach predominates. See sec. 701 (Partners, Not Partnership, Subject to Tax), sec. 702 (Income and Credits of Partner). In other areas, the entity approach predominates. See sec. 742 (Basis of Transferee Partner’s Interest), sec. 743 (Optional Adjustment to Basis of Partnership Property). Outside of subchapter K, whether the ag

ests are owned by each of the partners. Subchapter K of the Internal Revenue Code (Partners and Partnerships) blends both approaches. In certain areas, the aggregate approach predominates. See sec. 701 (Partners, Not Partnership, Subject to Tax) and sec. 702 (Income and Credits of Partner). In other areas, the entity approach predominates. See sec. 742 (Basis of Transferee Partner’s Interest) and sec. 743 (Optional Adjustment to Basis of Partnership Property). Outside of subchapter K, whether th

Each partner is taxed on his distributive share of partnership income without regard to whether the income is actually distributed to him. Sec. 1.702-1(a), Income Tax Regs. Section 722 provides that the basis of a partnership interest acquired by contribution of money or other property to a partnership is the amount of such money, and the

Each partner is taxed on his distributive share of partnership income without regard to whether the income is actually distributed to him. Sec. 1.702-1(a), Income Tax Regs. Section 722 provides that the basis of a partnership interest acquired by contribution of money or other property to a partnership is the amount of such money, and the

- 10 - partners under section 702 in accordance with his or her interest in the partnership and is reflected in each partner's adjusted basis in the partnership pursuant to section 705(a).

Each partner is taxed on his distributive share of partnership income without regard to whether the income is actually distributed to him. Sec. 1.702-1(a), Income Tax Regs. Section 722 provides that the basis of a partnership interest acquired by contribution of money or other property to a partnership is the amount of such money, and the

Each partner is taxed on his distributive share of partnership income without regard to whether the income is actually distributed to him. Sec. 1.702-1(a), Income Tax Regs. Section 722 provides that the basis of a partnership interest acquired by contribution of money or other property to a partnership is the amount of such money, and the

Each partner is taxed on his distributive share of partnership income without regard to whether the income is actually distributed to him. Sec. 1.702- 1(a), Income Tax Regs. Section 704(a) provides the framework for the determination of a partner's distributive share of partnership income, gain, loss, deductions, or credits of the partner

Although section 212(3) applies only to individuals, under section 702 each partner, in determining his income tax, is required to take into account separately his distributive share of certain partnership items.

Section 706(a) provides: (a) YEAR IN WHICH PARTNERSHIP INCOME IS INCLUDIBLE--In computing the taxable income of a partner for a taxable year, the inclusions required by section 702 and 707(c) 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.

y following fiscal years ending June 30 and Sept. 30, 1988, respectively. This is because Pertinax is on a calendar year, consistently with the limitations of sec. 706(b), and its partners include within their income for a taxable year of theirs any sec. 702 distributive share taxable income with respect to a partnership for any taxable year of the partnership ending within or with the taxable year of the partner. Sec. 706(a). However, the fact that the corporate petitioners would not be taxed o

y following fiscal years ending June 30 and Sept. 30, 1988, respectively. This is because Pertinax is on a calendar year, consistently with the limitations of sec. 706(b), and its partners include within their income for a taxable year of theirs any sec. 702 distributive share taxable income with respect to a partnership for any taxable year of the partnership ending within or with the taxable year of the partner. Sec. 706(a). However, the fact that the corporate petitioners would not be taxed o