The Ashlands have conceded that they were not entitled to a $4,785,616 flow-through loss deduction from Airport Plaza Partnership for 2002 from purported “guaranteed payments” Airport Plaza made. In addition, our decision in Brennan v. Commissioner, T.C. Memo. 2012-187, bars the Ashlands from claiming that Cutler made certain “guaranteed payments” in 2002 entitling them to a $4,785,616 flow-through loss deduction from Cutler. The flow-through loss deduction concession with respect to Airport Plaza and our decision resolve the Ashlands' deficiency for 2002.
The Ashlands' deficiencies for 1997, 1998, 1999, 2000, 2004 and 2005 are based on the disallowance of net operating loss carrybacks and carryforwards stemming from the claimed flow-through loss deduction from Airport Plaza for 2002. Accordingly, these deficiencies too are resolved by the Ashlands' concession and our decision in Brennan.
All other issues either have been conceded or need not be decided because they follow from our holdings or are computational.
5 The term “whipsaw” refers to a situation when different taxpayers treat the same transaction involving the same items inconsistently, thus creating the possibility that income could go untaxed or two unrelated parties could deduct the same expenses on their separate returns.
6 The taxpayer generally bears the burden of proving the Commissioner's determinations are erroneous. Rule 142(a). The burden of proof may shift to the Commissioner if the taxpayer satisfies certain conditions. Sec. 7491(a). We resolve the issues here on a preponderance of the evidence, not on an allocation of the burden of proof. Therefore, we need not consider whether sec. 7491(a) would apply. See Estate of Black v. Commissioner, 133 T.C. 340, 359 (2009).
7 The partnership agreement includes all understandings and agreements among the partners, or between one or more partners and the partnership, concerning affairs of the partnership and responsibilities of partners, whether oral or written, and whether or not embodied in a document referred to by the partners as the partnership agreement. Sec. 1.704-1(b)(2)(ii)(h), Income Tax Regs. Therefore, the allocation of the capital gains income from the IA sale to Mr. Brennan and Ms. Ashland set forth in the restructuring agreement overrides any different allocation set forth in a prior Cutler partnership agreement or other document.
8 A partner retires when he or she ceases to be a partner under local law. Sec. 1.736-1(a)(1)(ii), Income Tax Regs.
9 Because Cutler is a partnership for tax purposes and for convenience and clarity, we refer to Mr. Brennan's membership interest in Cutler as a partnership interest