                          T.C. Memo. 2001-13



                        UNITED STATES TAX COURT



          GARY F. AND HELEN OVERSTREET, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2659-00.                       Filed January 22, 2001.


     Gary F. Overstreet and Helen Overstreet, pro sese.

     Robert H. Schorman, Jr., for respondent.



                          MEMORANDUM OPINION


     FOLEY, Judge:   By notice dated January 6, 2000, respondent

determined a deficiency of $47,582 relating to petitioners’ 1992

Federal income taxes.    All section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.
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The sole issue for determination is whether respondent issued the

notice of deficiency within the limitations period.

                            Background

     The parties submitted this case fully stipulated pursuant to

Rule 122.   When the petition was filed, petitioners resided in

Los Angeles, California.

     In 1987, Mr. Overstreet’s law partnership, Finley, Kumble,

Wagner, Heine, Underberg, Manley, Myerson and Casey (Finley,

Kumble), ceased operation and dissolved.    On February 24, 1988,

several of Finley, Kumble’s creditor banks filed an involuntary

bankruptcy petition on behalf of Finley, Kumble, pursuant to

chapter 7 of the Bankruptcy Code, which the bankruptcy court, on

March 4, 1988, converted to a chapter 11 bankruptcy proceeding.

In 1992, some of Finley, Kumble’s debts were discharged in the

bankruptcy proceeding.

     Finley, Kumble’s original 1992 Form 1065, U.S. Partnership

Return of Income, filed on September 21, 1993, identified 280

general partners, including Mr. Overstreet and Marshall Manley.

Mr. Manley had the largest profit interest of any partner (i.e.,

5.6075 percent).   Mr. Overstreet’s profit interest was O.1680

percent.

     On September 15, 1994, respondent began an examination of

Finley, Kumble’s 1992 partnership return.   Because Finley, Kumble

did not designate a tax matters partner (TMP), respondent
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identified Mr. Manley as the TMP.    On June 20, 1996, and on May

29, 1997, Mr. Manley executed a Form 872-P, Consent to Extend the

Time to Assess Tax Attributable to Items of a Partnership,

relating to Finley, Kumble’s 1992 taxable year.    The June 20,

1996, form extended the time for assessment from September 21,

1996, to December 31, 1997, while the May 29, 1997, form extended

the assessment time to December 31, 1998.

     On August 10, 1998, respondent issued a Notice of Final

Partnership Administrative Adjustment (FPAA) relating to

cancellation of debt income received by Finley, Kumble in 1992.

Neither Mr. Manley, nor any of the notice partners, filed a

petition challenging the FPAA.    Mr. Overstreet did not receive

notice of the partnership examination, the FPAA, or Mr. Manley’s

appointment as the TMP.   On January 6, 2000, respondent issued

and sent, by certified mail, an affected items notice of

deficiency to petitioners, relating to Finley, Kumble’s

cancellation of indebtedness income.

                            Discussion

     Petitioners contend that the limitations period for issuance

of the FPAA was not properly extended, and, therefore, the notice

of deficiency was time-barred.    Respondent contends the Court

does not have jurisdiction over whether the issuance of the FPAA

was timely because this case is not a partnership proceeding.      We

agree with respondent.
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      In a unified partnership proceeding, pursuant to sections

6221 through 6231, partnership items are treated separately from

a partner’s deficiency proceedings involving nonpartnership

items.    Generally, respondent is required to give partners notice

of the beginning of a partnership proceeding and the FPAA

resulting from such proceeding.    See sec. 6223(a).   Respondent

was not, however, required to provide such notice to Mr.

Overstreet because he had less than a 1-percent interest in the

profits of Finley, Kumble, a partnership with more than 100

partners.   See sec. 6223(b).   Further, the TMP’s failure to

notify Mr. Overstreet of the partnership proceeding does not

affect the applicability of the partnership proceeding or the

FPAA to Mr.   Overstreet.   See sec. 6230(f).

     This Court does not have jurisdiction to determine

partnership items in a partner level proceeding.    See secs. 6221,

6226; Brookes v. Commissioner, 108 T.C. 1, 6 (1997).     The

expiration of the period of limitations for issuance of the FPAA

is an affirmative defense that must be raised in a partnership

level proceeding.   See Crowell v. Commissioner, 102 T.C. 683, 693

(1994); Genesis Oil & Gas Ltd. v. Commissioner, 93 T.C. 562, 565

(1989).

     Petitioners, citing Barbados #7 Ltd. v. Commissioner, 92

T.C. 804 (1989), as authority, contend that they are,

nonetheless, entitled to contest the timeliness of the FPAA
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because the extension of time to issue it was granted by an

ineligible TMP.    We disagree.    While the Court in Barbados #7

Ltd. determined that the FPAA was invalid because the extension

of time for issuance was signed by an ineligible TMP, Barbados #7

Ltd. was a partnership, rather than partner level, proceeding.

     Petitioners also contend that, even if Mr. Manley properly

extended the period of limitations for issuance of the FPAA, the

notice of deficiency was not mailed to them in a timely manner.

Section 6229(d) tolls the period of limitations, extending the

time for respondent to issue the notice of deficiency until 1

year and 150 days after the issuance of the FPAA.     The

limitations period therefore expired on January 7, 2000.

Petitioners contend that the postmark on respondent’s certified

mail list shows that the notice of deficiency was not sent until

January 8, 2000.    This contention is meritless.   The parties

stipulated that the notice of deficiency was sent January 6,

2000.   Petitioners did not dispute respondent’s determination

that petitioners owed tax relating to their share of the

partnership cancellation of indebtedness income.     Accordingly,

respondent’s determination is sustained.

     Contentions we have not addressed are moot, irrelevant, or

meritless.
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To reflect the foregoing,


                                    Decision will be entered for

                            respondent.
