Opinion
22933-19
09-15-2021
Todd D. Graham & Traci R. Graham, Petitioners v. Commissioner of Internal Revenue, Respondent
ORDER
Emin Toro Judge
This case is currently set for trial at the Court's September 20, 2021, Kansas City, Missouri, remote trial session. On September 13, 2021, respondent filed an unopposed Motion to Dismiss and to Strike Partnership Items (Doc. 20) moving that the Court dismiss the portion of this case insofar as it relates to adjustments from or related to Superox Holding, LLC, Graham Family Partnership LP, and Firsthird Capital Partners (the "Partnerships") and strike the portion of the adjustments and pleadings pertaining to and only to the Partnerships.
This case is based upon a notice of deficiency issued on October 1, 2019, determining deficiencies in income tax, additions to tax under section 6651(a)(1)1, and penalties under section 6662 for the tax years 2015 and 2016. Respondent's motion to dismiss states:
3. Certain, but not all, of the adjustments to Petitioners' taxable income appearing in the notice of deficiency arise from Petitioners' interests in the Partnerships for the tax years 2015 and 2016.
4. Specifically, the adjustments for $77, 296.00 to Other Income and for $85, 580.00 to Capital Gain or Loss for the tax year 2015, and the adjustments for $27, 000.00 to Rents Received and for $85, 580.00 to Capital Gain or Loss for the tax year 2016 are attributable to Petitioners' interests in the Partnerships.
5. The Partnerships are TEFRA partnerships which for the tax years 2015 and 2016 have the tax treatment of their partnership items determined at the partnership level pursuant to I.R.C. §§ 6221 through 6234. The Partnerships are not excluded from the TEFRA provisions by reason of the small partnership exception of I.R.C. § 6231(a)(1)(B)(i), because each of the Partnerships has at least one partner that is itself a partnership.
6. The tax treatment of the Partnerships' partnership items for the tax years 2015 and 2016 is determined at the partnership level. I.R.C. § 6221.. . .
8. The Court does not have jurisdiction in this partner-level proceeding to determine or redetermine the partnership items of the Partnerships for the tax years 2015 and 2016. The erroneous inclusion of those partnership items in the notice of deficiency issued to Petitioners does not give the Court jurisdiction to redetermine them. See Maxwell v. Commissioner, 87 T.C. 783 (1986).
9. Although the notice of deficiency is invalid to the extent it determines adjustments to taxable income attributable to TEFRA partnership items, the notice of deficiency is valid to the extent it determines adjustments to nonpartnership items. The adjustments to royalty income of $4, 019.00 and $2, 673.00 for the tax years 2015 and 2016, respectively, the related computational adjustments to the self-employment tax and the self-employment tax deduction, and the related penalties and additions to the tax with respect to the nonpartnership items in the notice of deficiency are not related to TEFRA partnership items.
Also on September 13, 2021, the parties filed a First Supplemental Stipulation of Settled Issues (Doc. 21) and a Motion for Continuance of Trial (Doc. 22).
The Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") partnership provisions provide that all partnership items are determined at the partnership level and not at the partner level. Sec. 6221 et seq. We do not have jurisdiction in a partner's personal tax case to redetermine any portion of a deficiency attributable to partnership items. See sec. 6221; GAF Corp. & Subs. v. Commissioner, 114 T.C. 519, 524 (2000); Maxwell v. Commissioner, 87 T.C. at 787-788. Accordingly, we do not have jurisdiction over any portion of petitioners' deficiency attributable to the Partnership items. See sec. 6221; GAF Corp. & Subs. v. Commissioner, 114 T.C. at 524; Maxwell v. Commissioner, 87 T.C. at 787-788.
Upon due consideration, it is hereby
ORDERED that respondent's Motion to Dismiss and to Strike Partnership Items is granted; the adjustments in the notice of deficiency relating to partnership items of Superox Holding, LLC, Graham Family Partnership LP, and Firstthird Capital Partners are invalid; and this case is dismissed for lack of jurisdiction insofar as it pertains to the partnership items of Superox Holding, LLC, Graham Family Partnership LP, and Firstthird Capital Partners. It is further
ORDERED that any portion of the petition that relates to the partnership items of Superox Holding, LLC, Graham Family Partnership LP, and Firstthird Capital Partners are deemed stricken. It is further
ORDERED that the parties' Joint Motion for Continuance of Trial is granted in that this case is stricken from the Court's September 20, 2021, Kansas City, Missouri, remote trial session. It is further
ORDERED that, on or before November 19, 2021, the parties shall file with the Court either a joint report (or, if that is not expedient, then separate reports) describing the status of the case or a stipulated decision document. It is further
ORDERED that the undersigned judge retains jurisdiction of this case.