                  T.C. Memo. 2009-150



                UNITED STATES TAX COURT



        DAVID R. AND SUSAN PACK, Petitioners v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 23626-07.                Filed June 24, 2009.



     R determined that Ps are liable for additions to tax
pursuant to sec. 6653(a), I.R.C., for their 1983 tax year
and for an addition to tax pursuant to sec. 6661(a), I.R.C.,
for their 1985 tax year.

     Held: Ps are liable for the additions to tax pursuant
to sec. 6653(a), I.R.C., for their 1983 tax year and
pursuant to sec. 6661(a), I.R.C., for their 1985 tax year.



James G. LeBloch, for petitioners.

Hans F. Famularo, for respondent.
                                    - 2 -

                   MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:        Petitioners are husband and wife.    They were

married in 1982.        This case is before the Court on a petition for

redetermination of two affected items notices of deficiency in

which respondent determined that petitioners are liable for the

following additions to tax:1

                                    Additions to Tax
     Year            Sec. 6653(a)(1) Sec. 6653(a)(2)   Sec. 6661(a)
                                             *
     1983               $612.60                                ---
     1985                 ---               ---              $2,702
             *
           50 percent of the interest due on a deficiency of
     $12,252 for petitioners’ 1983 tax year.

         Unless otherwise indicated, section references are to the

Internal Revenue Code, as amended and in effect for the tax years

at issue.        The issues for decision are whether petitioners are

liable for each of the additions to tax listed in the table

above.


                              FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by




     1
      Besides the additions to tax listed in the table,
respondent also determined that petitioners are liable for a
$3,675.60 addition to tax under sec. 6659. At trial respondent
conceded that petitioners are not liable for that addition to
tax. Respondent reiterates that concession on brief.
                                - 3 -

reference into our findings.   At the time they filed their

petition, petitioners resided in California.

     Mr. Pack graduated from high school in 1964 and attended

several junior colleges in California but never obtained an

associate of arts degree.    He was drafted into the Army in 1966

and was discharged after 49 days because of a knee injury.      From

1968 to 1971 he worked in the shipping and receiving department

of a motorcycle parts distributor.      He then got a job in the

major appliances section at a K-Mart, where he worked his way up

to manager.   He eventually left K-Mart and began working in the

construction business, first as a superintendent’s helper for a

friend’s construction business and then as an adjustor for a

general contractor that did insurance repair work.      In 1978 Mr.

Pack obtained a general contractor’s license and started his own

insurance repair business.

     In the late 1970s--around the time he started his business--

Mr. Pack was introduced to Leslie George Hukriede, Jr., a

certified public accountant (C.P.A.) with his own firm.2     Mr.

Pack enlisted Mr. Hukriede to prepare his personal and business

tax returns, which Mr. Hukriede did from 1979 to the mid-to-late




     2
      Mr. Hukriede’s name is misspelled “Hookrey” throughout the
trial transcript.
                               - 4 -

1990s.3   Those returns include petitioners’ 1983 and 1985 Forms

1040, U.S. Individual Income Tax Return, which are at issue.

     Unfortunately for petitioners, Mr. Hukriede’s advice

extended beyond preparing their tax returns.   Mr. Hukriede also

recommended investment opportunities to Mr. Pack.   During or

before 1981 Mr. Hukriede recommended that Mr. Pack invest in

Platte Leasing Associates (Platte), a limited partnership

involved in leasing electronic data processing equipment.    Mr.

Pack took Mr. Hukriede up on that advice.   On June 19, 1981, Mr.

Pack invested $25,047.50 for a limited partner interest in

Platte.   He paid $16,297.50 in cash and signed a promissory note

due February 15, 1982, for $9,898.44, including $1,148.44 of

interest and $8,750 of principal.4

     On June 30, 1981, Platte became a limited partner of Tulip

Leasing Associates (Tulip).   Tulip and Platte had been organized

in 1978 and 1979, respectively, by Topspin Data Corp. (Topspin)

and Kent M. Klineman, an investment banker and lawyer who,

together with his wholly owned entity, Klineman Holding Corp.,

owned Topspin.   Mr. Klineman was tax matters partner of both


     3
      Records of the California Board of Accountancy, of which we
will take judicial notice, indicate that Mr. Hukriede’s C.P.A.
license was revoked via a default decision on Apr. 29, 2007, when
he failed to respond to the Board of Accountancy’s inquiries and
subpoena concerning certain matters that it was investigating.
Mr. Hukriede had been a licensed C.P.A. in California since Apr.
23, 1971.
     4
      Mr. Pack paid the note in full and on time.
                               - 5 -

Tulip and Platte.   Although Mr. Pack had no actual information

one way or the other, he assumed that Mr. Hukriede was

compensated by Platte in connection with his investment.5

     Before investing in Platte, Mr. Pack received a number of

documents.   Among them was an investment memorandum.   The first

page of that memorandum contained the following warning in all

capital letters:

     THE PROJECTIONS CONTAINED IN THIS MEMORANDUM HAVE BEEN
     PREPARED ON THE BASIS OF VIEWS AS TO FEDERAL INCOME TAX
     LAW WHICH ARE BELIEVED TO BE REASONABLE BUT ARE SUBJECT
     TO SUBSTANTIAL QUALIFICATION AND ARE LIKELY TO BE
     CHALLENGED BY THE INTERNAL REVENUE SERVICE. THE
     PROJECTED RESULTS OF AN INVESTMENT ARE BASED UPON THE
     MOST FAVORABLE POSSIBLE TAX TREATMENT OF A NUMBER OF
     ISSUES. IN THE EVENT OF AN AUDIT, AN ADVERSE FINAL
     DETERMINATION ON ANY OF THESE ISSUES WOULD
     SIGNIFICANTLY REDUCE OR ELIMINATE VIRTUALLY ALL
     PROJECTED TAX BENEFITS OF AN INVESTMENT.

     The memorandum’s first page also warned that “AN INVESTMENT

IS SUBJECT TO SIGNIFICANT ECONOMIC AND TAX RISKS AND IS SUITABLE

ONLY FOR PERSONS QUALIFIED TO ASSUME THESE RISKS” and that “THE

OFFERING INVOLVES CONFLICTS OF INTEREST AND SUBSTANTIAL

COMPENSATION TO THE GENERAL PARTNERS AND THEIR AFFILIATES.”

     In a section of the memorandum titled “Possible Loss of Tax

Benefits”, the memorandum laid out in detail the “numerous


     5
      On June 23, 1981, shortly after Mr. Pack invested in
Platte, Mr. Hukriede completed a “REPRESENTATIVE’S QUESTIONNAIRE”
for Platte in connection with the investment. In it, he
indicated that he had informed Mr. Pack of all compensation that
had been paid to him in the preceding 2 years or that may be paid
to him in the future by KA Securities, Inc., or related
individuals or entities in connection with Mr. Pack’s investment.
                                - 6 -

grounds” on which the Internal Revenue Service might challenge

deductions taken by Tulip, Platte, or petitioners.6   In a section

titled “Increased Risk of Audit”, the memorandum noted that

     A substantial number of the partnerships in which the
     Managing Partner and Mr. Klineman serve as general
     partners are undergoing audit by the Service. With
     respect to two of these partnerships, the audits have
     been completed and the audit agents have recommended
     that all deductions be disallowed.


     In 1983 Platte filed with the Internal Revenue Service and

provided to petitioners Schedules K-1, Partner’s Share of Income,

Credits, Deductions, etc., in which Platte allocated to

petitioners an ordinary loss of $32,053.7   In turn, on their 1983

joint Form 1040 petitioners claimed an ordinary loss of $13,618

and an investment interest expense deduction of $18,976 relating

to their interest in Platte as deductions in computing their

taxable income for that year.   For 1985 Platte allocated

petitioners $16,602 of ordinary income and $15,741 of investment

interest expense.   They reported the $16,602 of ordinary income

on a Schedule E, Supplemental Income Schedule, attached to their

1985 Form 1040.   And they claimed an investment interest expense

deduction of $15,741 relating to their investment in Platte.   Mr.


     6
      Among the many tax issues with which the memorandum
expressed concern were the “at-risk” rules of sec. 465. The at-
risk rules limit “the amount of possible deductions to the amount
an individual has at risk in the venture.” Hill v. Commissioner,
204 F.3d 1214, 1220 (9th Cir. 2000).
     7
      The actual losses on the Schedule K-1 totaled $32,054.
                               - 7 -

Hukriede prepared petitioners’ 1983 and 1985 joint Federal income

tax returns.

     On March 19, 1987, respondent issued petitioners a notice of

deficiency regarding their 1983 tax year.   Therein, respondent

determined that petitioners were liable for a section 6653(a)(1)

addition to tax of $239.85 and a section 6653(a)(2) addition to

tax of 50 percent of the interest due on $4,797.   In response,

petitioners filed a petition for redetermination with this Court.

This Court eventually dismissed the petition for lack of

jurisdiction on the basis that the petition was “invalid because

the notice of deficiency purports to determine a deficiency in

income tax as a result of petitioners’ investment in Platte

Leasing Associates, a TEFRA partnership whose 1983 tax treatment

will be determined at the partnership level”.8

     On March 16, 1992, respondent sent Tulip a notice of final

partnership administrative adjustment (FPAA) for its 1983 tax

year.9   An FPAA was issued to Platte for its 1983 tax year on

April 26, 1993.   A few days earlier--on April 19, 1993--

respondent had issued an FPAA for Platte’s 1985 tax year.

     On June 5, 1992, a petition in the name of Tulip, Kent M.

Klineman, Tax Matters Partner, was filed with the Court at docket


     8
      The Court’s dismissal order granted a motion to dismiss for
lack of jurisdiction that respondent had filed.
     9
      At some point respondent also issued FPAAs for Tulip’s 1984
and 1985 tax years.
                                - 8 -

No. 12213-92.    That case concerned Tulip’s 1983 and 1984 tax

years.10   On July 19, 1993, a petition in the name of Platte,

Kent M. Klineman, Tax Matters Partner, was filed with the Court

at docket No. 15468-93.    That case concerned Platte’s 1983 and

1984 tax years.    At some point in the first part of 2006

respondent and Mr. Klineman agreed, without objection by any

other partner, to sustain respondent’s FPAA determinations for

Tulip’s 1983, 1984, and 1985 tax years and for Platte’s 1983 and

1984 tax years.

      On June 21, 2006, the Court entered decisions against Tulip

and Platte upholding as correct the partnership item adjustments

as determined and set forth in the FPAAs for Tulip’s and Platte’s

1983 and 1984 tax years.    On August 2, 2006, the Court entered a

decision against Tulip upholding as correct the partnership item

adjustments as determined and set forth in the FPAA for Tulip’s

1985 tax year.

     On July 9, 2007, respondent issued the aforementioned

affected items notices of deficiency with respect to petitioners’

1983 and 1985 tax years.    Petitioners then filed a timely

petition with this Court.    A trial was held on December 4, 2008,

in Los Angeles, California.




     10
      A petition concerning Tulip’s 1985 tax year was filed on
July 19, 1993, at docket No. 15390-93.
                                 - 9 -

                                OPINION

I.   Additions to Tax Under Section 6653(a)

     Section 6653(a) imposes additions to tax if any part of any

underpayment of tax is due to negligence or disregard of rules

and regulations.11    For the purposes of this statute, negligence

is defined as a “‘lack of due care or failure to do what a

reasonable and ordinarily prudent person would do under the

circumstances.’”     Neely v. Commissioner, 85 T.C. 934, 947 (1985)

(quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir.

1967), affg. in part and remanding in part 43 T.C. 168 (1964) and

T.C. Memo. 1964-299).

     The Court of Appeals for the Ninth Circuit, to which an

appeal would lie in this case absent a stipulation to the

contrary, has held that a determination as to negligence for

purposes of sections 6653(a) and 6661(a) in a case involving a

deduction for loss that results from an investment “depends upon

both the legitimacy of the underlying investment, and due care in

the claiming of the deduction.”     Sacks v. Commissioner, 82 F.3d

918, 920 (9th Cir. 1996), affg. T.C. Memo. 1994-217.



     11
      Those additions to tax are for (1) an amount equal to 5
percent of the underpayment and (2) an amount equal to 50 percent
of the interest payable under sec. 6601 with respect to the
portion of the underpayment which is attributable to negligence.
Such interest runs for the period beginning on the last date
prescribed by law for payment of such underpayment and ending on
the date of the assessment of the tax or the date of payment,
whichever is earlier. Sec. 6653(a)(2)(B).
                               - 10 -

     Referring to the three-prong test set forth by the Court in

Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43 (2000),

affd. 299 F.3d 221 (3d Cir. 2002), petitioners raise a reasonable

reliance defense.12   They contend that they were not negligent

because (1) “Mr. Hukriede was a competent professional who had

sufficient expertise to justify reliance both in his preparation

of the Petitioners’ tax returns and his opinion as to the various

investment alternatives he recommended to the Petitioners”; (2)

Mr. Hukriede was provided all necessary information; and (3)

“Based on Petitioner-Husband [sic] testimony there is no doubt

that he in fact relied in good faith on Mr. Hukriede’s judgment

and advice.”

     Respondent argues that petitioners do not satisfy the first

and third Neonatology requirements.     Addressing the first

Neonatology requirement, although respondent acknowledges that

petitioners sought the advice of their C.P.A., Mr. Hukriede,

respondent contends that petitioners did not seek independent


     12
      Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43
(2000), affd. 299 F.3d 221 (3d Cir. 2002), sets forth the
following three requirements in order for a taxpayer to use
reliance on a tax professional to avoid liability for a sec.
6662(a) penalty: “(1) The adviser was a competent professional
who had sufficient expertise to justify reliance, (2) the
taxpayer provided necessary and accurate information to the
adviser, and (3) the taxpayer actually relied in good faith on
the adviser's judgment.” Sec. 6662 is a successor to sec.
6653(a). See Goettee v. Commissioner, T.C. Memo. 2003-43 n.4
(“The substance of former secs. 6653(a) and 6659 now appears in
sec. 6662.”), affd. 192 Fed. Appx. 212 (4th Cir. 2006).
                             - 11 -

advice regarding their investment in Platte and that there is no

evidence that Mr. Hukriede “had expertise in, or even any

familiarly [sic] with, computer equipment leasing transactions or

that he ever professed to have such expertise.”   Concerning the

third Neonatology requirement, respondent asserts that

petitioners’ reliance on Mr. Hukriede was unreasonable because

“Petitioners knew that Mr. Hukriede suffered from a conflict of

interest” and because after reading the investment memorandum

“Petitioners knew or should have known that the represented tax

benefits from this questionable tax shelter investment were too

good to be true.”

     As explained below, although reasonable reliance on

professional advice may serve as a defense to the additions to

tax for negligence, see United States v. Boyle, 469 U.S. 241, 251

(1985), petitioners have not demonstrated that they acted with

due care with respect to their investment in Platte and the

resulting tax deduction claimed in 1983 for losses relating to

that investment.

     Arrangements similar to the one that petitioners invested

in--a circular, computer equipment sale-leaseback arrangement--

have been the subject of a host of judicial opinions, including

those of the Court of Appeals for the Ninth Circuit.   See, e.g.,

Whitmire v. Commissioner, 178 F.3d 1050 (9th Cir. 1999), affg.

109 T.C. 266 (1997); Am. Principals Leasing Corp. v. United
                              - 12 -

States, 904 F.2d 477 (9th Cir. 1990); see also Waters v.

Commissioner, 978 F.2d 1310 (2d Cir. 1992), affg. T.C. Memo.

1991-462, cert. denied, 507 U.S. 1018 (1993); Young v.

Commissioner, 926 F.2d 1083 (11th Cir. 1991), affg. T.C. Memo.

1988-440 and Cohen v. Commissioner, T.C. Memo. 1988-525; Moser v.

Commissioner, 914 F.2d 1040 (8th Cir. 1990), affg. T.C. Memo.

1989-142.   In the overwhelming majority of cases, courts have

denied taxpayers the planned tax benefits of the arrangements on

the basis that the taxpayers were ultimately protected from

potential liability by guaranties; i.e., because their risk of

loss was too remote.   See, e.g., Whitmire v. Commissioner, supra

at 1054 (“We conclude that Whitmire was not at risk under section

465 because he was protected from loss by section 465(b)(4)

guarantees, and because the scenario under which Whitmire would

suffer loss was no more than a ‘theoretical possibility’ based on

the fulfillment of remote numerous contingencies.”); Waters v.

Commissioner, supra at 1316 (“In this case, there was no

realistic possibility that Waters would suffer an economic loss

if the underlying transaction became unprofitable.”); Young v.

Commissioner, supra at 1088 (“The taxpayers were not at risk with

respect to personal liability and a loss-limiting arrangement in

the circular sale/leaseback transactions with guarantees of rent,

indemnities for default and an underlying nonrecourse obligation

connecting the taxpayers’ obligee Elmco to the taxpayers’
                               - 13 -

lessees.”).13   In any event, petitioners’ claimed deductions

relating to their investment in Platte are not at issue in this

affected items case.   This case concerns only petitioners’

liability for additions to tax stemming from deficiencies

assessed as a result of adjustments relating to their investment

in Platte.

     It is clear that petitioners received some professional

advice before investing in Platte.      Unfortunately, they received

much of that advice from their C.P.A., Mr. Hukriede, who, because

he was compensated on Platte’s behalf in connection with the

investment, had an obvious conflict of interest that rendered

reliance on him unreasonable.14   See Hansen v. Commissioner, 471


     13
      The Court of Appeals for the Sixth Circuit is the lone
Court of Appeals to take a contrary approach--it has adopted a
“worst case scenario” standard as opposed to the “realistic
possibility” standard adopted by the other Courts of Appeals.
See Martuccio v. Commissioner, 30 F.3d 743, 748-751 (6th Cir.
1994), revg. and remanding T.C. Memo. 1992-311; Emershaw v.
Commissioner, 949 F.2d 841, 849-851 (6th Cir. 1991), affg. T.C.
Memo. 1990-246. Both of those cases (and those espousing the
majority view) were decided long after Mr. Pack invested in
Platte and petitioners filed their 1983 and 1985 Federal income
tax returns.
     14
      In addition, for whatever reason, Mr. Hukriede did not
testify at trial, which permits us to infer that his testimony
would not have been favorable to petitioners. See Wichita
Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946),
affd. 162 F.2d 513 (10th Cir. 1947). Nor did Mr. Hukriede
provide petitioners with a written opinion concerning their
investment in Platte. We have only Mr. Pack’s testimony, from
memory, as to advice that he received in the early-to-mid-1980s.
Because the facts to which Mr. Pack’s testimony relates occurred
about a quarter of a century before trial, Mr. Pack had
                                                   (continued...)
                                - 14 -

F.3d 1021, 1031 (9th Cir. 2006) (“We have previously held that a

taxpayer cannot negate the negligence penalty through reliance on

a transaction’s promoters or on other advisors who have a

conflict of interest.”), affg. T.C. Memo. 2004-269; see also

Helbig v. Commissioner, T.C. Memo. 2008-243 (“To the extent that

petitioner relied on the advice of Mr. Toepfer, a promoter with

an obvious personal interest in CCJRP, this reliance constitutes

a failure to exercise due care before investing in CCJRP.”).

     Petitioners also received professional advice in the

investment memorandum, which was replete with conspicuous

warnings about the economic and tax risks associated with an

investment in Platte.   See supra pp. 5-6.   The memorandum even

went so far as to inform petitioners that the Internal Revenue

Service had already audited returns of other partnerships managed

by Mr. Klineman and that the audit agents had recommended that

all deductions be disallowed.    See supra p. 6.   Failing to heed

those warnings, and relying on the advice of their conflicted

C.P.A., Mr. Pack invested in Platte and petitioners claimed the

purported tax benefits of that investment.

     Under the circumstances, petitioners acted with a lack of

due care in investing in Platte and in claiming deductions



     14
      (...continued)
difficulty making credible and detailed statements as to those
facts. As a consequence, the specific nature of Mr. Hukriede’s
advice to petitioners is unclear.
                                - 15 -

relating to their interest in Platte on their 1983 joint Federal

income tax return.   Consequently, petitioners are liable for the

section 6653(a)(1) and (2) additions to tax.

II.   Addition to Tax Under Section 6661(a)

      Section 6661(a) provides for an addition to tax of 25

percent of the amount of any underpayment attributable to a

substantial understatement.15   In the case of individual tax

returns filed before January 1, 1987, there is a “substantial

understatement” of income tax for any tax year where the amount

of the understatement exceeds the greater of (1) 10 percent of

the tax required to be shown on the return for the taxable year

or (2) $5,000.   Sec. 6661(b)(1)(A).     However, the amount of the

understatement is reduced to the extent attributable to an item

(1) for which there is or was substantial authority for the

taxpayer’s treatment thereof, or (2) with respect to which the

relevant facts were adequately disclosed on the taxpayer’s return

or an attached statement.   Sec. 6661(b)(2)(B).16


      15
      In 1985 sec. 6661(a) provided for a 10-percent addition to
tax. The amount of the sec. 6661(a) addition to tax was later
increased to 25 percent for additions to tax assessed after Oct.
21, 1986. Omnibus Budget Reconciliation Act of 1986, Pub. L.
99-509, sec. 8002, 100 Stat. 1874, 1951. The retroactive
increase of the amount of the penalty from 10 percent to 25
percent does not violate petitioners’ constitutional rights to
equal protection or due process. See Licari v. Commissioner, 946
F.2d 690, 692-695 (9th Cir. 1991), affg. T.C. Memo. 1990-4.
      16
      Where the understatement at issue is attributable to a tax
shelter, adequate disclosure is inconsequential; and, in addition
                                                   (continued...)
                              - 16 -

     In their brief petitioners argue that respondent “abused his

discretion in not waiving the penalty under §6661 based on

Petitioners [sic] good faith reliance on their financial advisor

and CPA Mr. Hukriede.”   Respondent contends that there is no

evidence that petitioners ever requested a waiver and that the

Court therefore has no basis to review respondent’s determination

for abuse of discretion.   We agree with respondent.

     Because no evidence in the record reflects that petitioners

have sought or were denied a waiver of the section 6661(a)

addition to tax, we cannot find that respondent abused his

discretion in failing to waive the addition to tax.    See Dugow v.

Commissioner, T.C. Memo. 1993-401, affd. without published

opinion 64 F.3d 666 (9th Cir. 1995).   Moreover, in light of our

earlier conclusions regarding petitioners’ lack of due care with

respect to their 1983 deduction, petitioners have not

demonstrated that they satisfied the reasonable cause and good

faith tests necessary to obtain a waiver.   See Finazzo v.

Commissioner, T.C. Memo. 2002-56 (“Even if petitioners had

requested a waiver under section 6661(c), the record demonstrates




     16
      (...continued)
to substantial authority, the taxpayer must demonstrate a
reasonable belief that the tax treatment claimed was more likely
than not proper. Sec. 6661(b)(2)(C). Because the result is the
same whether or not we label Platte a tax shelter, we will
analyze petitioners’ entitlement to a reduction of the sec.
6661(a) addition to tax as though Platte were not a tax shelter.
                              - 17 -

that they failed to act reasonably and in good faith in deducting

the claimed loss”.); see also sec. 1.6661-6, Income Tax Regs.

III. Section 6651(a) Additions to Tax Not Limited to Amounts
     Listed in 1987 Notice of Deficiency

     On brief petitioners assert that section 6212(c) prohibits

respondent from determining additions to tax that exceed those

determined in the 1987 notice of deficiency, as to which they

filed a petition that the Court eventually dismissed for lack of

jurisdiction.   They argue that the amounts of the additions to

tax for their 1983 tax year should be limited to the amounts

determined in the 1987 notice of deficiency.   We are unpersuaded.

     Section 6212(c)(1) provides in pertinent part that

     If the Secretary has mailed to the taxpayer a notice of
     deficiency as provided in subsection (a), and the
     taxpayer files a petition with the Tax Court within the
     time prescribed in section 6213(a), the Secretary shall
     have no right to determine any additional deficiency of
     income tax for the same taxable year * * *

     Section 6212(c)(1) applies to bar the Commissioner from

issuing a notice of deficiency only if the taxpayer has already

filed a petition in response to a valid notice of deficiency--a

petition for redetermination filed in response to an invalid

notice of deficiency does not trigger the bar of section

6212(c)(1).   See Carnahan v. Commissioner, T.C. Memo. 1991-168

(“The operative language in section 6212(c)(1) is ‘notice of

deficiency’ and implies a valid ‘notice of deficiency.’”).     The

March 19, 1987, notice of deficiency issued to petitioners for
                             - 18 -

their 1983 tax year was invalid because it was issued before the

completion of Platte’s partnership-level proceeding.

Accordingly, the Court dismissed petitioners’ petition and

respondent was not barred from issuing petitioners another notice

of deficiency (and from determining greater additions to tax for

their 1983 tax year) after Platte’s partnership-level proceeding

had been completed.

     The Court has considered all of petitioners’ contentions,

arguments, requests, and statements.   To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                         Decision will be entered

                                   for respondent except as to

                                   the section 6659 addition to

                                   tax for 1983.
