Tax News

CCH (cch.taxgroup.com) reports:

  In a bankruptcy proceeding, a federal district court had subject matter jurisdiction to review a debtor-partner's challenge to a notice of final partnership administrative adjustment (FPAA). The statutory res judicata provision in section 505(a)(2)(A) of the Bankruptcy Code did not deprive the district court of jurisdiction because the IRS's tax treatment of the debtor's partnership items was never contested before and adjudicated by the Tax Court or any other tribunal of competent jurisdiction.

  None of the partners timely filed a petition for readjustment in the Tax Court within 150 days from the mailing of the FPAA. The partners' participation in a conference with the IRS Appeals office following the receipt of the FPAA was insufficient to satisfy the statutory requirements that, for res judicata to apply, a tax matter must be contested before and adjudicated by a judicial or administrative tribunal within the meaning of section 505(a)(2)(A) of the Bankruptcy Code.

  Further, the IRS's adjustments to the debtor-partner's partnership items were not final and conclusive even though the TEFRA time limit for filing a petition had expired prior to the bankruptcy filing because the district court was authorized to exercise bankruptcy jurisdiction to redetermine the debtor's partnership items. The FPAA could be given preclusive effect only if there had been a proceeding and judgment in the Tax Court. Since the debtor failed to timely pursue a Tax Court action, neither section 505(a)(2)(A) of the Bankruptcy Code nor any other TEFRA provisions precluded the exercise of that jurisdiction.

  Reversing and remanding a DC Calif. decision, 2005-2 USTC ¶50,612.

Central Valley AG Enterprises, CA-9, 2008-2 USTC ¶50,405

Other References:

 
Code Sec. 6226

  CCH Reference - 2008FED ¶37,709.15

 
Code Sec. 6871

  CCH Reference - 2008FED ¶40,630.275

  Tax Research Consultant

  CCH Reference - TRC PART: 60,550