Jurisdiction Lacking Over a Partner’s Readjustment Petition Where a Timely Petition Already Filed by Tax Matters Partner (Devonian Program, TCM)

An individual partner’s petition for readjustment of a notice of final partnership administrative adjustment (FPAA) was dismissed for lack of jurisdiction because a timely readjustment petition had been already filed by the partnership’s tax matters partner (TMP). The corporation was the partnership’s general partner and TMP, contrary to the argument of the individual partner, who was also the sole shareholder and the president of the corporation. The subscription agreement executed by the corporation incorporated a private placement memorandum that identified the corporation as the partnership’s TMP and gave it exclusive and complete discretion and control over the partnership’s management, business and affairs. The subscription agreement and the private placement memorandum also provided that the corporation would receive, in addition to a flat fee for services rendered, a 17-percent interest in the partnership’s revenues, for which it would pay $3,000. Moreover, in a letter sent in response to an IRS audit-related request, the corporation’s president admitted that the corporation was a general partner in the partnership and that it had contributed the $3,000 for the 17-percent interest in the partnership. The enclosed Schedules K-1 for the tax years subject to the audit also identified the corporation as a general partner and confirmed its capital interest and the $3,000 contribution. Further, the partnership return filed for one of the years in question designated the corporation as the partnership’s TMP.

Devonian Program, TC Memo. 2010-153, Dec. 58,271(M)

Other References:

Code Sec. 6226

CCH Reference – 2010FED ¶37,709.60

Code Sec. 6231

CCH Reference – 2010FED ¶37,849.05

Tax Research Consultant

CCH Reference – TRC LITIG: 7,150

CCH Reference – TRC PART: 60,552

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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