Gemini Twin Fund Iii, Petitioner/appellant, v. Commissioner Internal Revenue Service, Respondent/appellee, 8 F.3d 26 (9th Cir. 1993)

MEMORANDUM^* 

Appellant Gemini Twin Fund III ("Gemini") contests the Tax Court's exercise of jurisdiction and holding, in a partnership-level proceeding, that Gemini's Leveraged Drilling Unit partners had no adjusted basis in their own collateralized promissory notes, which they had contributed to the partnership.

The Tax Court properly exercised jurisdiction in determining this partnership item. It related to each partner's share of "amounts determinable at the partnership level with respect to partnership assets ... [or] transactions" and was "necessary to enable the ... partners to determine ... [a]mounts at risk." 26 U.S.C. § 6231(a) (3); 26 C.F.R. § 301.6231(a) (3)-1(a) (1) (vi) (C). The Tax Court was correct in determining that the Leveraged Drilling Unit partners could have no adjusted basis in their own notes, despite the fact that they were secured by mortgages on real property. Except to the extent to which the partners had made actual payments on the notes, they were only promises to pay. See Don E. Williams Co. v. Commissioner, 429 U.S. 569, 579 (1977); Helvering v. Price, 309 U.S. 409, 413-14 (1940); Levy v. Commissioner, 732 F.2d 1435, 1437 (9th Cir. 1984).

AFFIRMED.