Thompson v. Commissioner, 137 T.C. 220

Thompsons filed a TEFRA partnership-level case challenging assistant FPAA adjustments for 2001 from RJT Investments X, LLC.
RJT, formed by Randall Thompson in 2001, was deemed not engaged in profit and an economic sham in the partnership-level proceeding.
The FPAA for 2001 reflected flow-through adjustments, including a $4,248,420 deficiency and a $1,699,368 penalty later modified in stipulation Exhibit B.
A September 22, 2008 notice of deficiency was issued, but issues were later identified as to whether it properly reflected partnership-item treatment and whether partner-level determinations were required.
A July 18, 2011 stipulation amended several amounts and acknowledged adjustments to reflect the partnership-level ruling while noting remaining questions about specific items, including a $206 dividend amount.
The Court ultimately dismissed the case for lack of jurisdiction, holding that the notice of deficiency was an impermissible TEFRA computation and that no partner-level determinations were needed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Court has jurisdiction to review the 2001 deficiency in light of TEFRA procedures	Thompsons contend partnership-level determinations were finalized and collaterally estopped	Respondent maintains the 2001 notice is a valid computational adjustment tied to partnership items	Lack of jurisdiction; notice invalid for TEFRA purposes
Whether an erroneous computational adjustment constitutes a separate determination creating jurisdiction	Any error would still reflect the partnership-item treatment	Such errors could be treated as an additional determination	No; the adjustments are computational and controlled by partner-level determinations
Whether any partner-level determinations were required to reflect the partnership-item treatment	Partner-level determinations were necessary for the liquidation loss and outside basis	No partner-level determinations were needed for the 2001 adjustments	No partner-level determinations needed; case dismissed for lack of jurisdiction
Whether the notice of deficiency can be challenged without partner-level determinations	Tax Court jurisdiction should apply despite potential partner-level nature	Deficiency procedures are not triggered unless partner-level determinations are needed	Not required; TEFRA procedures preclude Tax Court review in this context

N.C.F. Energy Partners v. Commissioner, 89 T.C. 741 (1987) (distinguishes items that require partner-level determinations from computational adjustments)
Hannan v. Commissioner, 52 T.C. 787 (1969) (jurisdictional predicate is a Commissioner’s determination, not mere deficiency existence)
Meyer v. Commissioner, 97 T.C. 555 (1991) (discussed treatment of adjustments and jurisdictional notes in TEFRA context)
Petaluma FX Partners, LLC v. Commissioner, 591 F.3d 649 (D.C. Cir. 2010) (outside basis; collateral estoppel; TEFRA partnership-level and partner-level distinctions)
Jade Trading, LLC v. United States, 598 F.3d 1372 (Fed. Cir. 2010) (outside basis not a partnership item; TEFRA jurisdictional implications)
Copeland v. Commissioner, 290 F.3d 326 (5th Cir. 2002) (profit motive and TEFRA implications for partnership items)