T.C. Memo. 2006-67
UNITED STATES TAX COURT
SUE TAYLOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21744-03.
Filed April 6, 2006.
P filed Federal income tax returns for P and two
LLCs for 1999 and 2000. R subsequently determined
deficiencies and penalties with respect to P’s income
taxes, which P contested primarily on the basis of tax
protester arguments. P also argued that R did not
provide to either of the LLCs a final partnership
administrative adjustment and therefore the deficiency
notice mailed to her was premature.
Held: Following a concession by R, P is liable
for the remaining deficiencies, except for an
adjustment for a reduced share of income from one LLC
in 1999, determined by R for 1999 and 2000 including
self-employment taxes pursuant to sec. 1401, I.R.C.
Held, further, P is liable for a penalty under
sec. 6662, I.R.C., for 1999 and 2000.
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1 Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and in effect for
the years in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
2 Respondent conceded petitioner’s allegedly unreported
income derived from National Land Bank LLC (National Land Bank)
in the amount of $43,862 for 1999 because respondent determined
that a tax return was filed for National Land Bank. However,
there was a mathematical subtraction error on National Land
Bank’s Form 1065, U.S. Partnership Return of Income, for 1999.
Instead of reporting $10,308 in income, National Land Bank
reported a $10,308 loss. Petitioner’s Form 1040, U.S. Individual
Income Tax Return, Schedule E, Supplemental Income and Loss,
consistent with the erroneous Form 1065, Schedule K-1 (Form
1065), Partner’s Share of Income, Credits, Deductions, Etc.,
reported her 50-percent alleged distributive share loss of
$5,154. The notice of deficiency for 1999 eliminated the $5,154
loss but, because of the claimed $43,862 income adjustment, did
not contain an adjustment to properly reflect her mathem