Assessment Extensions for Individual Returns Included Partnership Items

The Tax Court reaffirmed that assessment extensions for individual returns applied to partnership items, even though the partnerships’ tax years ended before the taxpayers’ tax years.


The taxpayers were partners in partnerships that participated in a Son-of-Boss tax shelter. On their returns for the tax year ending on December 31, 2000, they claimed losses from partnerships whose tax year ended on December 19, 2000. During the lengthy IRS examination of the losses, the taxpayers signed Forms 872-I that extended the period for assessing their deficiencies.

More than three years after the partners filed their returns, the IRS disallowed the losses because the partnerships were shams. The partners accepted that conclusion. However, they argued that their assessments were untimely because their extensions did not apply to items from the partnerships’ returns.

Form 872-I expressly applied only to returns made “by or for ” the taxpayers for the period “ending December 31, 2000.”  Thus, the partners argued that their assessment extensions did not apply to items from partnership returns for the tax year ending on December 19, 2000.


The problem for the partners was that the Tax Court  had already rejected their argument.

In WHO515 Inv. Partners, Dec. 59,255(M), TCM 2012-316, the court considered an identical argument in almost identical circumstances. The court noted that partnership items were included in the partners’ income for any tax year that ends in the partners’ tax year. Thus, if the partner’s tax year ends on December 31, it includes partnership items for any partnership tax year that ends during that same calendar year.

Accordingly, the Form 872-I for the partners’ individual returns included the partnership items. The form did not have to expressly refer to the ending date of the partnership’s tax year.

Precedent Reaffirmed

The partners in the current case recognized that Who515 was fatal to their argument. However, they claimed that it had been wrongly decided, and urged the court to reconsider it.

The court declined. The partners correctly noted that their Forms 872-I applies only to their individual returns. However, those returns necessarily included the items from the parnterships’ returns because those returns were filed for partnership tax years that ended during the partners’ tax year.

Inman Partners, TC Memo. 2018-114, Dec. 61,225(M)

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All stories by: CCHTaxGroup