Bedrosian v. Commissioner, No. 18-70066 (9th Cir. 2019)
Annotate this CaseA challenge to the timeliness of a partnership proceeding must be raised in the partnership proceeding itself and that failure to do so results in a forfeiture of the argument. The Ninth Circuit affirmed the tax court's dismissal of taxpayers' petition challenging adjustments to a Final Partnership Administrative Adjustment (FPAA) involving taxpayers' partnership. In an earlier appeal, the panel upheld the validity of the partnership proceeding and the adjustments made therein. The panel held that taxpayer's challenges in this case essentially amounted to a collateral attack on the partnership proceeding. In this case, the taxpayers had an opportunity to challenge the FPAA during the partnership proceeding, but elected not to do so.
Court Description: Tax. The panel affirmed the Tax Court’s dismissal, for lack of jurisdiction, of taxpayers’ petition challenging adjustments to a Final Partnership Administrative Adjustment involving taxpayers’ partnership. The Internal Revenue Service initiated a partnership proceeding that resulted in administrative adjustments to a partnership tax return and disallowances of certain deductions. The IRS simultaneously pursued a deficiency proceeding against the partners (taxpayers) individually, to enforce the partnership-level adjustments. In a prior appeal challenging the results of the partnership proceedings, this court affirmed. In taxpayers’ challenge to the partnership adjustments asserted in the deficiency proceeding, the Tax Court dismissed the petition as untimely because taxpayers should have brought their challenges in the partnership-level proceedings. Joining every other circuit court to consider this issue, the panel held that a challenge to the timeliness of a Final Partnership Administrative Adjustment must be raised in the partnership-level proceeding itself, and that failure to do so results in a forfeiture of the argument. The panel therefore affirmed the Tax Court’s dismissal of taxpayers’ petition for lack of jurisdiction. BEDROSIAN V. CIR 3
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