Recent TEFRA Partnership Tax Litigation

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

Stevens v. Comm’r, T.C. Memo. 2020-118 | August 6, 2020 | Halpern, J. | Dkt. Nos. 29815-13, 9539-15

Short SummaryThe IRS determined deficiencies for the taxpayers’ 2006, 2008, 2009, and 2010 tax years.  In addition, the IRS asserted additions to tax under Section 6651(a)(1) and accuracy-related penalties under Section 6662(a) for 2006, 2008, and 2010.  Moreover, because the taxpayers had not filed returns for 2005, 2007, 2011, and 2012, the IRS issued separate notices of deficiency to each taxpayer and also determined additions to tax under Section 6651(a)(1) and (2) and estimated additions to tax under Section 6654 for 2011 and 2012.

After the notices of deficiency were issued, the taxpayers submitted to the IRS signed and unsigned returns reflecting losses from TEFRA partnerships which effectively offset the deficiencies.  Prior to trial, the IRS moved to dismiss for lack of jurisdiction so much of each case as it related to partnership items, which was granted by the Tax Court.  Thereafter, the IRS provided recomputed deficiencies reflecting the dismissal of partnership items.  The taxpayers provided no evidence at trial challenging the adjustments underlying the deficiencies.

Key Issue:  To what extent can the Tax Court uphold the IRS’ recomputed deficiencies in light of the taxpayers’ claimed partnership loss deductions?

Primary Holdings

Key Points of Law:

Insight:  The Stevens case again illustrates the complexity in the old TEFRA regime.  However, fewer of these cases will be heard by the Tax Court as the IRS initiates more partnership examinations under the new BBA audit procedures.

 

Tax Court Litigation Attorneys

Need assistance litigating in the U.S. Tax Court? Freeman Law’s tax attorneys are experienced litigators with trial-tested litigation skills and in-depth substantive tax knowledge, having collectively litigated hundreds of cases before the U.S. Tax Court. Our tax controversy lawyers have extensive experience in Tax Court matters involving partnership audits and litigation under both the TEFRA and BBA regimes, international tax penalties, foreign trusts, valuation, reasonable compensation disputes, unreported income, fraud penalties, other tax penalties, and many other matters. We draw on our experience and wealth of tax knowledge to advise and guide clients through the entire tax controversy process, building the right strategy to resolve tax controversies from day one. Schedule a consultation or call (214) 984-3000 to discuss your Tax Court concerns or questions.