'Nominal' partnership interest by pass-through
insufficient to fall under small partnership exception to
TEFRA
The Tax Court ruled April 7 that a pass-through partner's
interest in a partnership, while nominal, still did not qualify the
partnership to fall under the small partnership exception to the
TEFRA procedures.
In
Brumbaugh v. Commissioner, T.C. Memo 2015-65 (April 7, 2015),
the petitioner, Brumbaugh, was an individual partner in a
partnership (Panorama LLC), holding a 59.99% interest. Another
individual partner held a 39.99% interest, while a third partner, a
partnership (Lynx), held a 0.02% interest. On his 2007 income tax
return, Brumbaugh claimed an interest deduction, which was
disallowed by the IRS. The IRS also determined certain losses were
subject to the Section 469 passive activity loss rules and asserted
an accuracy-related penalty under Section 6662(a). None of the
adjustments set forth in the notice of deficiency to Brumbaugh
related to
