Opinion
12660-21
10-05-2022
SILVER RUN HOLDINGS, LLC, SILVER RUN PARTNERS, LLC, A PARTNER OTHER THAN THE TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Patrick J. Urda Judge
Before this Court is an unopposed motion for partial summary judgment filed by petitioner, Silver Run Partners, LLC (SR Partners). [Doc. 10. Also pending before us is a companion case at docket number 10457-21.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times. "Doc." references are to the docket record in Docket No. 12660-21, as numbered by the Clerk of this Court.
The motion for partial summary judgment in this case asks the Court to find that SR Partners properly invoked the Court's jurisdiction in its capacity as a notice partner of Silver Run Holdings, LLC (Silver Run) pursuant to section 6226(b). SR Partners meanwhile has filed a motion to dismiss for lack of jurisdiction in Docket No. 10457-21, which it had filed in its purported capacity as Silver Run's tax matters partner. In essence, we must decide which case moves forward. We will grant the motion for partial summary judgment here.
Background
Our determination turns on whether SR Partners properly qualifies as Silver Run's tax matters partner. The Limited Liability Company Agreement for Silver Run designated Mr. Fred Denny, a member, and Red Oak Reserve, a non-member, as co-managers. Nonetheless, on its 2017 Form 1065, U.S. Return of Partnership Income, Silver Run designated SR Partners as its tax matters partner. During a later IRS audit, Silver Run again identified SR Partners as its tax matters partner, with SR Partners functioning in that capacity throughout the audit.
On March 25, 2021, the IRS issued a notice of final partnership administrative adjustment (FPAA) for Silver Run's tax year ending December 31, 2017. SR Partners thereafter filed a petition as Silver Run's tax matters partner on June 8, 2021, in Docket No. 10457-21. SR Partners then filed a petition as a notice partner of Silver Run on June 28, 2021, which initiated this case. [Doc. 1.]
Discussion
Section 6626(a) provides that within 90 days after the day on which an FPAA is mailed to the tax matters partner, the tax matters partner may file with this Court, a petition for readjustment of the partnership items for the taxable year. Section 6626(b) provides that if the tax matters partner does not file a readjustment petition under subsection (a) with respect to any FPAA, any notice partner (and any 5-percent group) may, within 60 days after the close of the 90-day period set forth in subsection (a), file with the Tax Court a petition for a readjustment of the partnership items for the taxable year. Section 6226(b)(5) provides that if a notice partner files a petition during the 90-day window for tax matters partner petitions (commonly referred to as a "premature petition"), the premature petition is deemed to be filed on the last day of the 60-day notice partner window.
Section 6231(a)(7) includes in its definition of the tax matters partner of any partnership, "the general partner designated as the tax matters partner as provided in regulations." Only a member-manager of a limited liability company can be a general partner. See Treas. Reg. § 301.6231(a)(7)-2(a).
The record establishes (and the parties agree) that SR Partners was not a member-manager of Silver Run. SR Partners thus was not a general partner of Silver Run and could not act as its tax matters partner. SR Partners thus was a notice partner on June 8, 2021, and the petition it filed in Docket No. 10457-21 constituted a premature petition under section 6226(b)(5) as it was filed within the 90-day tax matters partner petition window. This premature petition is deemed to be filed on the last day of the 60-day notice partner window, i.e., August 23, 2021. See § 6226(b)(5).
SR Partners properly initiated this case as a notice partner on June 28, 2021, during the 60-day period following the 90-day window for petitions by tax matters partners. See § 6226(b). The petition here was filed before the date on which the petition in Docket No. 10457-21 was deemed to be filed, and we therefore have jurisdiction over this case.
In light of the foregoing, it is
ORDERED that petitioner's motion for partial summary judgment, filed February 16, 2022, is granted.