                        T.C. Memo. 1998-146



                      UNITED STATES TAX COURT


           GREENBERG BROTHERS PARTNERSHIP #12, a.k.a.
    LONE WOLF MCQUADE ASSOCIATES, AND RICHARD M. GREENBERG,
                TAX MATTERS PARTNER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

                CINEMA '84, RICHARD M. GREENBERG,
               TAX MATTERS PARTNER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket Nos. 22780-91, 621-92.            Filed April 22, 1998.

     Thomas E. Redding, for participants Edwin A. Locke, Jr. and

Karin M. Locke.

     Joseph F. Long and Gerald A. Thorpe, for respondent.


                        MEMORANDUM OPINION

     POWELL, Special Trial Judge:    These consolidated cases are

before the Court on participants Edwin A. Locke, Jr. and Karin M.

Locke's (collectively the Lockes) motion to dismiss for lack of

jurisdiction.   Respondent concedes that the filing of a petition
                                - 2 -


in bankruptcy by Mr. Locke divested this Court of jurisdiction

over Mr. Locke and his partnership items pursuant to section

6231(b) and (c)1 and section 301.6231(c)-7T(a), Temporary Proced.

& Admin. Regs., 52 Fed. Reg. 6793 (Mar. 5, 1987) (the bankruptcy

rule).   The primary issue is whether the operation of the

bankruptcy rule also divests this Court's jurisdiction over Mrs.

Locke, who is deemed a partner and a party to these proceedings

subject to the unified audit and litigation procedures of

sections 6221 through 6231 enacted by the Tax Equity & Fiscal

Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec. 402(a),

96 Stat. 648, by virtue of having filed joint income tax returns

with Mr. Locke.

                             Background

     Greenberg Brothers Partnership #12, a.k.a. Lone Wolf McQuade

Associates and Cinema '84 (the partnerships) are two of a number

of partnerships formed to purchase and exploit the rights to

certain films.    The general partners of those partnerships were

Richard M. Greenberg and/or A. Frederick Greenberg.2   Respondent

     1
          Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
     2
          On its partnership returns for the years in issue
Greenberg Brothers Partnership #12, a.k.a. Lone Wolf McQuade
Associates claimed loss deductions based on the alleged purchase
of the films "Lone Wolf McQuade" and "Strange Invaders". On its
partnership returns for the years in issue Cinema '84 claimed
                                                   (continued...)
                                 - 3 -


began an examination of these partnerships at some point in the

mid-1980's as part of a national project focusing on the various

partnerships of the Greenberg brothers.

     Respondent issued notices of final partnership

administrative adjustments (FPAA's) to the tax matters partner

(TMP) for each of the partnerships determining adjustments to

partnership items for the following partnership taxable years:

                                 Partnership
Docket No.       FPAA Date       Taxable Years    Petition Date

22780-91         July 8, 1991    1983-86          Oct. 7, 1991
621-92           Oct. 15, 1991   1984-89          Jan. 8, 1992

     At the time the petitions in these cases were filed the

principal place of business for each partnership was located at

Greenwich, Connecticut.

     The Lockes were married and filed joint Federal income tax

returns for the years at issue.    Mr. Locke's investment in these

partnerships was purchased only in his name.     The Schedules K-1

issued by the partnerships were issued solely in the name of Mr.

Locke.

     On April 7, 1992, Mr. Locke filed a petition in bankruptcy

with the U.S. Bankruptcy Court for the Southern District of New

York.    Mr. Locke subsequently was granted a discharge by order of

     2
      (...continued)
loss deductions based upon the alleged purchase of the motion
picture "The Terminator" starring Arnold Schwarzenegger, as well
as such films as "The Howling II", "Return of the Living Dead",
"Perfect Strangers", "A Breed Apart", and "Special Effects".
                                - 4 -


the Bankruptcy Court dated August 31, 1992.      Mrs. Locke did not

file a petition in bankruptcy.
                            Discussion

The TEFRA Provisions

     Pursuant to the TEFRA provisions the tax treatment of

"partnership items" generally is to be determined at the

partnership level.    See Maxwell v. Commissioner, 87 T.C. 783, 788

(1986).   Partnership items include each partner's proportionate

share of the partnership's aggregate items of income, gain, loss,

deduction, or credit.    Sec. 6231(a)(3); sec. 301.6231(a)(3)-

1(a)(1)(i), Proced. & Admin. Regs.      Nonpartnership items are

items that are not partnership items.      Sec. 6231(a)(4).

     This Court's jurisdiction of a partnership action is

predicated upon the mailing of a valid FPAA by the Commissioner

to the TMP and the timely filing by the TMP or other eligible

partner of a petition seeking a readjustment of partnership

items.    Rule 240(c); Seneca, Ltd. v. Commissioner, 92 T.C. 363,

365 (1989), affd. without published opinion 899 F.2d 1225 (9th

Cir. 1990).    Neither the Lockes nor respondent disputes that the

FPAA's were valid and that the petitions were timely filed in

these cases.

     For purposes of the TEFRA provisions section 6231(a)(2)

defines a partner as follows:

           (A)   a partner in the partnership, and

          (B) any other person whose income tax liability under
     subtitle A is determined in whole or in part by taking into
                              - 5 -


     account directly or indirectly partnership items of the
     partnership.

     Section 301.6231(a)(2)-1T(a)(1), Temporary Proced. & Admin.

Regs., 52 Fed. Reg. 6790 (Mar. 5, 1987), provides that a spouse

who files a joint return with an individual holding a separate

interest in the partnership shall be treated as a partner for

purposes of the TEFRA provisions and is permitted to participate

in administrative and judicial proceedings.

     Section 6226(c)(1) provides that if a partnership action is

brought under section 6226(a) or (b) each person who was a

partner in such partnership at any time during the year in issue

shall be treated as a party to such action.   However, section

6226(d)(1)(A) provides, in pertinent part, that section 6226(c)

shall not apply to a partner after the day on which the

partnership items of such partner for the particular partnership

taxable year become nonpartnership items by reason of one of the

events described in section 6231(b).   Section 6231(b)(1)(D)

provides, in part, that for purposes of the TEFRA provisions the

partnership items of a partner shall become nonpartnership items

as of the date a change occurs under subsection (c) of section

6231.

     Section 6231(c) provides that in certain special enforcement

areas the Secretary may provide by regulations for the conversion

of a partner's partnership items into nonpartnership items.

Computer Programs Lambda, Ltd. v. Commissioner, 89 T.C. 198, 203
                                - 6 -


(1987); see H. Conf. Rept. 97-760, at 610 (1982), 1982-2 C.B.

600, 667.    Pursuant to this grant of authority, the Secretary

promulgated the so-called bankruptcy rule, which provides as

follows:

            (a) Bankruptcy. The treatment of items as partnership
       items with respect to a partner named as a debtor in a
       bankruptcy proceeding will interfere with the effective and
       efficient enforcement of the internal revenue laws.
       Accordingly, partnership items of such a partner arising in
       any partnership taxable year ending on or before the last
       day of the latest taxable year of the partner with respect
       to which the United States could file a claim for income tax
       due in the bankruptcy proceeding shall be treated as
       nonpartnership items as of the date the petition naming the
       partner as debtor is filed in bankruptcy. [Sec.
       301.6231(c)-7T(a), Temporary Proced. & Admin. Regs., 52 Fed.
       Reg. 6793 (Mar. 5, 1987).]

The effect of the conversion is to remove the debtor-partner from

the partnership proceeding and subject the converted items to the

deficiency procedures applicable to the partner's individual tax

case.    Computer Programs Lambda, Ltd. v. Commissioner, supra at

203.

Nature of Mrs. Locke's Interest in the Partnerships

       In order to assess the impact of the bankruptcy rule upon

Mrs. Locke, we must first ascertain the nature of her interest,

if any, in the partnerships.    State law determines ownership of

property, and Federal income tax liability follows ownership.

United States v. Mitchell, 403 U.S. 190, 197 (1971).    On these

records, other than Mrs. Locke's unsupported assertion on brief

that she and Mr. Locke resided in New York during the years in
                              - 7 -


issue, there is no evidence before us of where the Lockes resided

at the time the partnership interests were purchased.    Although

statements in briefs do not constitute evidence, Rule 143(b);

Viehweg v. Commissioner, 90 T.C. 1248, 1255 (1988), respondent

has not suggested that another State's law should apply.

Therefore, we apply the laws of New York to ascertain the nature

of Mrs. Locke's interest, if any, in Mr. Locke's partnership

investments.

     New York law, unlike that of community property states, does

not entitle each spouse to a present vested interest in so-called

marital property during marriage.3    N.Y. Dom. Rel. Law sec.

236(B)(5) (McKinney 1986); Schurm v. Union Natl. Bank, 455

N.Y.S.2d 532, 534 (N.Y. Sup. Ct. 1982).    New York thus permits

each spouse to hold, control, encumber, or dispose of separate




     3
          The concept of marital property is reflected in New
York's Domestic Relations Law. Under the equitable distribution
provisions marital property is broadly defined as "all property
acquired by either or both spouses during the marriage * * *
regardless of the form in which title is held". N.Y. Dom. Rel.
Law sec. 236(B)(1)(c) (McKinney 1986); see O'Brien v. O'Brien,
489 N.E.2d 712, 715 (N.Y. 1985). In contrast, N.Y. Dom. Rel. Law
sec. 236(B)(1)(d) (McKinney 1986), provides a narrow enumeration
of what constitutes separate property. Because equitable
distribution applies only to the distribution of property in
divorce and similar matrimonial actions, N.Y. Dom. Rel. Law sec.
236(B)(5), supra, it does not purport to alter New York's common-
law rules of property. Schurm v. Union Natl. Bank, 455 N.Y.S.2d
532, 534 (N.Y. Sup. Ct. 1982).
                                - 8 -


property.    See N.Y. Dom. Rel. Law sec. 50 (McKinney 1988); N.Y.

Gen. Oblig. Law sec. 3-301(1) (McKinney 1989).4

     In the instant cases, the parties have stipulated that Mr.

Locke purchased the partnership interests in his name, and that

the partnerships issued all Schedules K-1 solely in Mr. Locke's

name.    We conclude that Mrs. Locke had neither a joint interest

in Mr. Locke's partnership investments, nor a separate interest

in the partnerships.

Analysis Under TEFRA

     The parties agree that as of the date Mr. Locke filed a

voluntary petition in bankruptcy, all partnership items

attributable to him were converted to nonpartnership items by

conjunctive operation of the bankruptcy rule and section 6231(b)

and (c).    As a result of that conversion, this Court in these


     4
          N.Y. Dom. Rel. Law sec. 50 (McKinney 1988), provides
that: "Property, real or personal, * * * owned by a married
woman * * * shall continue to be her sole and separate property
as if she were unmarried". N.Y. Gen. Oblig. Law sec. 3-301(1)
(McKinney 1989), provides that: "A married woman has all the
rights in respect to property, real or personal, and the
acquisition, use, enjoyment and disposition thereof * * * as if
she were unmarried." These provisions were enacted to abrogate
the common-law rule entitling the husband to all rents and
profits from his wife's real property and absolute rights in his
wife's personal property. See Practice Commentaries to N.Y. Dom.
Rel. Law sec. 50 (McKinney 1988). When construed in conjunction
with the equitable distribution statute, these provisions confirm
that property acquired by either spouse during marriage is
separate property unless otherwise determined in a proceeding for
equitable distribution under N.Y. Dom. Rel. Law sec. 236(B)(5)
(McKinney 1986). Practice Commentaries to N.Y. Dom. Rel. Law
sec. 50, supra.
                                 - 9 -


partnership proceedings does not have jurisdiction with respect

to Mr. Locke pursuant to section 6226(d)(1)(A) and (f).

     The parties further agree that Mrs. Locke's status as a

partner for TEFRA purposes derives solely from the joint income

tax returns she filed with Mr. Locke.    Sec. 6231(a)(2); sec.

301.6231(a)(2)-1T(a)(1), Temporary Proced. & Admin. Regs., 52

Fed. Reg. 6790 (Mar. 5, 1987).    It is also undisputed that by the

filing of joint returns Mrs. Locke became jointly and severally

liable for any taxes due thereon.    Sec. 6013(d)(3).   The parties

diverge, however, on whether the conversion of Mr. Locke's

partnership items to nonpartnership items pursuant to the

bankruptcy rule has any impact upon our jurisdiction over Mrs.

Locke in these proceedings.

     Mrs. Locke posits that Mr. Locke's status as a debtor in a

bankruptcy proceeding has a twofold effect upon her.    First, she

contends that any partnership items that could be adjusted in the

TEFRA proceeding that would affect her tax liability are

converted to nonpartnership items, thereby removing the basis for

this Court's subject matter jurisdiction under section 6226(f)

with regard to her.   Second, she argues that because her tax

liability is no longer "determined in whole or in part by taking

into account directly or indirectly partnership items of the

partnership", she ceases to be a partner within the meaning of

section 6231(a)(2)(B), and, consequently, must no longer be
                               - 10 -


within the personal jurisdiction of this Court under section

6226(c).

     Significantly, Mrs. Locke is unable to point to any statute

or regulation explicitly divesting this Court of jurisdiction

over her as a necessary concomitant to the conversion of Mr.

Locke's partnership items under the bankruptcy rule.      The

bankruptcy rule provides that the "partnership items of such a

partner * * * shall be treated as nonpartnership items as of the

date the petition naming the partner as debtor is filed in

bankruptcy".    Sec. 301.6231(c)-7T(a), Temporary Proced. & Admin.

Regs., 52 Fed. Reg. 6793 (Mar. 5, 1987); (emphasis added).      Mrs.

Locke does not contend that she ever was in bankruptcy, and thus

she is not within literal application of this rule.

     Instead, Mrs. Locke makes an interpretative argument based

upon section 6226(d)(1)(A).    That section provides that this

Court loses personal jurisdiction over a partner after the day on

which "the partnership items of such partner * * * became

nonpartnership items" by reason of certain events, including the

naming of the partner as a debtor in bankruptcy.    (Emphasis

added.)    To bring herself within the ambit of section

6226(d)(1)(A), Mrs. Locke argues that the quoted language should

be interpreted to mean "the partnership items related to such

partner".
                                - 11 -


     We disagree with Mrs. Locke's construction of the statute.

The language in section 6226(d)(1)(A) parallels that of the

bankruptcy rule.   Both are specific in targeting only the debtor

and in converting only the partnership items of the debtor.

Moreover, Mrs. Locke's expansive reading of section 6226(d)(1)(A)

is contrary to the fundamental principle of statutory

construction that where a statute is clear on its face,

unequivocal evidence of legislative purpose is required to

override the plain meaning of the words used.    Huntsberry v.

Commissioner, 83 T.C. 742, 747-748 (1984).    As Mrs. Locke has

proffered no such evidence, we decline to adopt the broad

interpretation urged upon us.

     Respondent argues that the resolution of this issue is

controlled by this Court's decision in Dubin v. Commissioner, 99

T.C. 325 (1992).    In Dubin this Court addressed the impact of the

bankruptcy rule upon a taxpayer who held a joint interest in a

partnership with her husband and with whom she had filed a joint

return.    The taxpayer's husband was named as a debtor in a

bankruptcy proceeding prior to the issuance of a single notice of

deficiency that disallowed certain partnership losses and

credits.   The taxpayer filed a motion to dismiss for lack of

jurisdiction on the ground that respondent's notice of deficiency

was invalid for failure to comply with the TEFRA procedures.      We

noted that section 6231(a)(12) provides a general rule, subject
                              - 12 -


to regulatory exception, that spouses with a joint interest in a

partnership are treated as one person (or partner).   We reasoned

that section 301.6231(a)(12)-1T(a), Temporary Proced. & Admin.

Regs., 52 Fed. Reg. 6793 (Mar. 5, 1987), supersedes that rule by

providing that, with certain narrow exceptions, spouses holding a

joint interest are to be treated as two distinct partners.5    We

concluded our analysis as follows:

     Because the focus in the bankruptcy rule is limited to the
     partner's status as a debtor in bankruptcy, we are compelled
     here to look only to petitioner's status, since she is the
     only partner before us, and, although she is a partner, she
     is not in bankruptcy. Accordingly, we find the bankruptcy
     rule to be inapplicable. [Dubin v. Commissioner, supra at
     334.]

Because the taxpayer was unaffected by the conversion of her

husband's partnership items we held the notice of deficiency

issued to the taxpayer to be invalid.

     We recognize that Dubin v. Commissioner, supra, involved a

joint partnership interest arising under community property law,

thereby implicating different statutory and regulatory provisions

than those here at issue.   However, we see no meaningful

distinction between the provisions applicable to a spouse whose

partner status derives from community property principles (viz, a


     5
          Our decision in Dubin v. Commissioner, 99 T.C. 325,
333-334 (1992), reflected our interpretation that, for purposes
of the bankruptcy rule, the term "person" as used in sec.
6231(a)(12) is synonymous with the term "partner" in sec.
301.6231(a)(12)-1T(a), Temporary Proced. & Admin. Regs., 52 Fed.
Reg. 6793 (Mar. 5, 1987).
                                  - 13 -


joint partnership interest) and a spouse who is deemed a partner

because a joint return was filed.6         Cf. Estate of Callaway v.

Commissioner, T.C. Memo. 1998-99.

       In addition, we note that the policy behind the bankruptcy

rule is inapplicable to Mrs. Locke's situation.         The purpose for

the bankruptcy rule is to prevent the automatic stay of 11 U.S.C.

section 362(a)(8) (1988), from impeding the TEFRA proceeding.

See Computer Programs Lambda, Ltd. v. Commissioner, 89 T.C. at

203.       Title 11 U.S.C. section 362(a)(8) (1988), generally

provides that the filing of a bankruptcy petition operates as a

stay of the commencement or continuation of a proceeding before

the Tax Court concerning the debtor.         See Kieu v. Commissioner,

105 T.C. 387, 391 (1995).       Since other partners are unaffected by

the resolution of a debtor-partner's bankruptcy proceeding, the

TEFRA proceeding should not be delayed pending the outcome of a

single partner's bankruptcy proceeding.         Mrs. Locke is not a

debtor in a bankruptcy proceeding.         Consequently, there is no

concern about an automatic stay, and thus no reason to convert

       6
          Indeed, the relevant regulatory provisions utilize
similar language in their treatment of a partner with a direct
interest (e.g., through community property) and an indirect
interest (through filing of a joint return). Compare sec.
301.6231(a)(12)-1T(a), Temporary Proced. & Admin. Regs., supra
("Thus, both spouses are permitted to participate in
administrative and judicial proceedings."), with sec.
301.6231(a)(2)-1T(a)(1), Temporary Proced. & Admin. Regs., 52
Fed. Reg. 6790 (Mar. 5, 1987) ("Thus, the spouse who files a
joint return with a partner will be permitted to participate in
administrative and judicial proceedings.").
                                - 14 -


her partnership items to nonpartnership items and remove her from

these proceedings.

     In sum, Mrs. Locke may not harness the bankruptcy rule as an

expedient to ride Mr. Locke's coattails out of these TEFRA

proceedings.   We hold that Mrs. Locke's partnership items did not

convert to nonpartnership items at the time that Mr. Locke's

partnership items converted to nonpartnership items pursuant to

the bankruptcy rule, and, therefore, she remains a party subject

to this Court's jurisdiction.

Allocation of Partnership Items

     By amended petitions the Lockes request that this Court

determine the proper allocation of partnership items between

them.7   Mrs. Locke maintains that, even if she remains a party to

these proceedings, her joint and several liability neither endows

her with a separate ownership interest in Mr. Locke's partnership

investments nor creates partnership items allocable to her.

Thus, she requests that we allocate 100 percent of the

partnership investments to Mr. Locke and zero percent to her.

     Nothing in either the bankruptcy rule or the statute allows

such an allocation of partnership items between spouses.



     7
          Sec. 6226(f) vests this Court with subject matter
jurisdiction to determine all partnership items of the
partnership for the partnership taxable year to which the FPAA
relates and the proper allocation of such items among the
partners.
                                - 15 -


     We have considered all the other arguments made by the

parties and, to the extent not discussed above, find them to be

irrelevant or without merit.8

     To reflect the foregoing,

                                      An appropriate order will be

                                 issued denying the motion to

                                 dismiss for lack of jurisdiction

                                 as to Karin M. Locke and granting

                                 the motion to dismiss for lack of

                                 jurisdiction as to Edwin A.

                                 Locke, Jr.




     8
          Also without merit is Mrs. Locke's argument that a
failure to allocate 100 percent of the partnership interests to
Mr. Locke could potentially result in double taxation.
Respondent is entitled to have any tax liability arising from Mr.
Locke's investments in the partnerships satisfied only once. See
Dolan v. Commissioner, 44 T.C. 420, 430 (1965). Full payment of
a joint and several obligation by one obligor extinguishes the
liability of all obligors. Kroh v. Commissioner, 98 T.C. 383,
397 (1992); Dolan v. Commissioner, supra at 430.
