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CHARLES R. AND BETTY I. COUNTER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
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Docket No. 26946-84
United States Tax Court
T.C. Memo 1992-496; 1992 Tax Ct. Memo LEXIS 514; 64 T.C.M. (CCH) 623;
September 1, 1992, Filed

*514 Held: 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. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798">96 T.C. 798 (1991).

For Petitioners: Declan J. O'Donnell.
For Respondent: Randall L. Preheim.
WHITAKER

WHITAKER

MEMORANDUM FINDINGS OF FACT AND OPINION

WHITAKER, Judge: This matter is before the Court on petitioners' motion for summary judgment filed pursuant to Rule 121. 1 Respondent determined deficiencies in Charles R. and Betty I. Counter's (petitioners) Federal income taxes for the taxable years ending December 31, 1978, and December 31, 1979, in the amounts of $ 22,401.48 and $ 49,276.48, respectively. 1

*515 A notice of deficiency was mailed to petitioners on April 20, 1984. Petitioners resided in Houston, Texas, 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

FINDINGS OF FACT

Petitioners were validly subscribed members of Winston Realty, Ltd. (Winston Realty), a limited partnership, for the taxable year ending December 31, 1979. 3 On May 26, 1981, petitioners filed their 1979 individual income tax return. *516 Winston Realty filed its 1979 partnership information return on January 14, 1981. Consequently, as of April 20, 1984, the period of limitations upon assessment had not expired with respect to petitioners' taxable year 1979; conversely, more than 3 years had elapsed since the filing of Winston Realty's 1979 partnership information return.

On April 13, 1992, petitioners filed a motion for summary judgment asserting that the period of limitations upon assessment had expired with respect to their distributive share of losses, deductions, and credits from Winston Realty prior to the issuance of the notice of deficiency. 4

*517 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. Petitioners contend 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.

Petitioners cite , revg. and remanding , 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 , 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*518 return when the period of limitations had run as to the subchapter S corporation's return. . 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 , 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 , affg. , the Second Circuit held that the applicable period of limitations was controlled by the partner's individual income tax returns rather than by the partnership return. See also , affg. on this issue . We consider , and , to be dispositive of this issue; consequently, *519 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, petitioners' motion for summary judgment will be denied.

An appropriate order will be issued.


Footnotes

  • 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 year in issue.

  • 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.

  • 3. In their motion for summary judgment, petitioners erroneously represent that they were validly subscribed members of Winston Realty for the taxable year 1978. For purposes of this opinion, petitioners' misrepresentation will be ignored, and their motion for summary judgment will be deemed to relate exclusively to their investment in Winston Realty for the taxable year 1979.

  • 4. On Apr. 16, 1992, petitioners 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, petitioners represent 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, petitioners' motion for summary judgment is properly viewed as a motion for partial summary judgment. See Rule 121(c).