Jackie E. Douglas v. Commissioner., United States Tax Court - Memorandum Decision, T.C. Memo. 1992-494, Docket No. 3495-85., Filed September 1, 1992

Jackie E. Douglas v. Commissioner.

United States Tax Court - Memorandum Decision

T.C. Memo. 1992-494

Docket No. 3495-85.

Filed September 1, 1992.

Declan J. O'Donnell, 6841 S. Yosemite St., Englewood, Colo., for the petitioner. Randall L. Preheim, for the respondent.

Memorandum Findings of Fact and Opinion

WHITAKER, Judge. This matter is before the Court on petitioner's motion for summary judgment filed pursuant to Rule 121. ¹ Respondent determined deficiencies in Jackie E. Douglas' (petitioner) Federal income taxes for the taxable years ending December 31, 1979, and December 31, 1980, in the amounts of $29,359 and $13,347, respectively.

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¹ Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code of 1954 in effect for the years in issue.

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A notice of deficiency was mailed to petitioner on November 14, 1984. Petitioner resided in Las Vegas, Nevada, at the time the petition herein was filed. The issue for decision is whether the period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partnership's information return, or by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. ²

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² The taxable years at issue antedate the enactment of secs. 6221-6233 which provide that the tax treatment of partnership income, loss, deductions, and credits is to be determined at the partnership level in a unified partnership proceeding for partnership taxable years beginning after Sept. 3, 1982.

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Findings of Fact

Petitioner was a validly subscribed member of Lion Fuel & Investment Co. (Lion Fuel), a limited partnership, for the taxable years ending December 31, 1979, and December 31, 1980. On July 3, 1980, and on April 15, 1981, petitioner filed her 1979 and 1980 individual income tax returns, respectively. Lion Fuel timely filed its 1979 and 1980 partnership information returns. On January 14, 1983, and on December 27, 1983, petitioner executed a Form 872-A, thereby extending the time to assess individual income tax against petitioner for the taxable years 1979 and 1980, respectively.

Pursuant to Form 872-A, the amount of income tax due for a taxable year may be assessed on or before the 90th day after: (1) Respondent receives a notice of termination from petitioner, (2) respondent mails a notice of termination to petitioner, or (3) respondent mails a notice of deficiency for the applicable period. Respondent neither received a notice of termination from petitioner, nor mailed a notice of termination to petitioner, for either of the taxable years at issue. Consequently, as of November 14, 1984, the period of limitations upon assessment had not expired with respect to petitioner's taxable years 1979 and 1980. Conversely, as of November 14, 1984, more than 3 years had elapsed since the filing of Lion Fuel's 1979 and 1980 partnership information returns.

On February 21, 1992, petitioner filed a motion for summary judgment asserting that the period of limitations upon assessment had expired with respect to her distributive share of losses, deductions, and credits from Lion Fuel prior to the issuance of the notice of deficiency. ³

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³ On Feb. 28, 1992, petitioner filed an amended petition wherein it was represented that "the parties have settled all issues on the merits of the case in a proposed Stipulation, subject to a determination of jurisdiction as requested herein." Similarly, in the motion for summary judgment, petitioner represents that "no trial on the merits is expected because the parties have executed a Stipulation, subject to jurisdiction." In the notice of objection to motion for summary judgment, however, respondent asserts that neither a stipulation of settled issues nor a closing agreement has been executed by the parties. Consequently, petitioner's motion for summary judgment is properly viewed as a motion for partial summary judgment. See Rule 121(c).

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Opinion

The sole issue for decision is whether the period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partnership's information return, or by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. Petitioner contends that the period of limitations is controlled by the filing of the partnership's information return. Conversely, respondent contends that the period of limitations is controlled by the filing of the partner's individual income tax return. Respondent agrees that there is no genuine issue as to any material fact relating to the applicable period of limitations upon assessment, and that a decision on this issue may be rendered as a matter of law. See Rule 121(b).

Petitioner cites Kelley v. Commissioner [89-1 USTC ╤ 9360], 877 F.2d 756 (9th Cir. 1989), revg. and remanding [Dec. 43,314(M)] T.C. Memo. 1986-405, as authority for the proposition that the period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partnership's information return. In Kelley v. Commissioner, supra, the Ninth Circuit held that the Commissioner may not adjust a taxpayer-shareholder's individual income tax return based upon an adjustment to a subchapter S corporation's information return when the period of limitations had run as to the subchapter S corporation's return. Id. at 759. We previously considered and rejected the Ninth Circuit's decision in Kelley in determining the period of limitations applicable to a partner's distributive share of partnership items. In Stahl v. Commissioner [Dec. 47,395], 96 T.C. 798 (1991), we held that the filing of a partnership information return does not affect the period of limitations upon assessment applicable to the determination of a deficiency against individual partners of a partnership. Similarly, in Siben v. Commissioner [91-1 USTC ╤ 50,215], 930 F.2d 1034 (2d Cir. 1991), affg. [Dec. 46,804(M)] T.C. Memo. 1990-435, the Second Circuit held that the applicable period of limitations was controlled by the partners' individual income tax returns rather than by the partnership return. See also Durovic v. Commissioner [73-2 USTC ╤ 9728], 487 F.2d 36 (7th Cir. 1973), affg. on this issue [Dec. 30,204] 54 T.C. 1364 (1970). We consider Stahl v. Commissioner, supra, and Siben v. Commissioner, supra, to be dispositive of this issue; consequently, we hold that the period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto.

In accordance with the holding set forth above, petitioner's motion for summary judgment will be denied.

An appropriate order will be issued.

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