                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 JOHN C. BEDROSIAN; JUDITH D.                       No. 18-70066
 BEDROSIAN,
             Petitioners-Appellants,                 Tax Ct. No.
                                                      12341-05
                      v.

 COMMISSIONER OF INTERNAL                             OPINION
 REVENUE,
             Respondent-Appellee.


                 Appeal from a Decision of the
                   United States Tax Court

            Argued and Submitted August 15, 2019
                    Pasadena, California

                      Filed October 8, 2019

 Before: Mary M. Schroeder and Susan P. Graber, Circuit
       Judges, and Joan H. Lefkow,* District Judge.

                  Opinion by Judge Schroeder




    *
      The Honorable Joan H. Lefkow, United States District Judge for the
Northern District of Illinois, sitting by designation.
2                        BEDROSIAN V. CIR

                            SUMMARY**


                                  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.


    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                     BEDROSIAN V. CIR                         3

                         COUNSEL

Steve R. Mather (argued), Mather Turanchik Law Corp., Los
Angeles, California; Richard E. Hodge, Malibu, California;
for Petitioners-Appellants.

Deborah K. Snyder (argued), Gilbert S. Rothenberg, and
Andrew M. Weiner, Attorneys; Travis A. Greaves, Deputy
Assistant Attorney General; Richard E. Zuckerman, Principal
Deputy Assistant Attorney General; Tax Division, United
States Department of Justice, Washington, D.C.; for
Respondent-Appellee.


                          OPINION

SCHROEDER, Circuit Judge:

    Taxpayers John and Judith Bedrosian seek to challenge
the Internal Revenue Service’s (IRS’s) disallowance of
deductions that they claimed on their 1999 and 2000 returns.
Because the deductions were generated by a partnership
entity, the IRS initiated a partnership proceeding that resulted
in administrative adjustments to the partnership’s return and
corresponding disallowances. The IRS simultaneously
pursued a deficiency proceeding against the Bedrosians
individually to enforce the partnership-level adjustments.

    In an earlier appeal, we upheld the validity of the
partnership proceeding and the adjustments made therein.
Bedrosian v. Comm’r, 358 F. App’x 868, 869 (9th Cir. 2009)
(unpublished). In what is essentially a collateral attack on the
partnership proceeding, taxpayers now challenge as untimely
the partnership-level adjustments the IRS asserted in the
4                    BEDROSIAN V. CIR

deficiency proceeding. The Tax Court dismissed the action
for lack of jurisdiction because challenges to the adjustments
should have been brought in the partnership proceeding.

     On appeal, the Bedrosians argue that there was no valid
partnership proceeding in which they could have challenged
the disallowances, because the partnership proceeding was
initiated after the relevant statute of limitations had expired
and was therefore a legal nullity. We have not had occasion
to address this issue, but other circuit courts uniformly have
held that a 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. We agree and affirm the Tax Court’s dismissal for
lack of jurisdiction.

                     BACKGROUND

    The taxpayers in this action are a married couple, John
and Judith Bedrosian. In 1999, the Bedrosians participated in
a tax-shelter scheme that used a partnership entity—Stone
Canyon Partners—to generate artificial losses, which the
Bedrosians reported as deductions on their individual 1999
and 2000 tax returns. Partnerships lend themselves well to
such tax shelters because partnerships do not pay federal
income tax. Instead, all income, deductions, and credits of a
partnership pass through to the partners. 26 U.S.C. § 701;
United States v. Woods, 571 U.S. 31, 38 (2013).

    To ensure equal tax treatment among partners of the same
partnership, and to remove the burden of duplicative audits
and lawsuits involving issues in common to the partnership,
Congress passed the Tax Equity and Fiscal Responsibility Act
                        BEDROSIAN V. CIR                               5

of 1982 (TEFRA), 26 U.S.C. §§ 6221–6233.1 See Woods,
571 U.S. at 38–39. TEFRA requires that all “partnership
items,” i.e., tax matters relevant to the partnership as a whole,
be adjudicated and adjusted in one proceeding at the
partnership level. See 26 U.S.C. § 6221(a).

    TEFRA outlines procedural safeguards to ensure that all
partners are notified and given time to choose to participate
in the partnership proceeding before any adjustments at the
partnership level are assessed against them. As relevant to
this case, the IRS must (1) notify the partners when a unified
partnership proceeding begins, (2) then wait 120 days before
issuing a Final Partnership Administrative Adjustment,
commonly referred to as an FPAA, and (3) give the partners
150 days to seek judicial review of the FPAA before it
becomes enforceable. See 26 U.S.C. §§ 6223(a), (d)(1),
6226(a), (b). Further, the IRS may not initiate a deficiency
proceeding against individual partners to collect payments
based on partnership-level adjustments until after the
partnership proceeding has concluded. See 26 U.S.C.
§ 6225(a) (partnership adjustments not enforceable until
FPAA’s 150-day challenge period has concluded); see also
Meruelo v. Comm’r, 691 F.3d 1108, 1115–17 (9th Cir. 2012).

    If the IRS violates TEFRA’s 120-day waiting period by
issuing a premature FPAA, partners have a right to “elect” to
have their items in the partnership treated as non-partnership
items so that those items can be challenged at the partner
level. See 26 U.S.C. § 6223(e). To do so, the partner must
file a statement of election with a designated IRS office
within 45 days of receiving the untimely notice. See Temp.

     1
       All citations to those sections and to 26 U.S.C. § 7422 are to the
versions in effect before 2018.
6                    BEDROSIAN V. CIR

Treas. Reg. § 301.6223(e)-2T, 52 Fed. Reg. 6779-01, 6785
(Mar. 5, 1987) (version in effect at the time); see also
26 U.S.C. § 6230(i) (providing that Treasury regulations will
prescribe time and manner for elections).

    The issues raised in this appeal arise from the IRS’s
departure from some of TEFRA’s requirements in the
Bedrosians’ case. The IRS initiated a partnership proceeding
against Stone Canyon Partners in February of 2005 to
disallow certain partnership deductions that the Bedrosians
had claimed on their 1999 and 2000 tax returns. The IRS
issued an FPAA only 62 days after initiating the partnership
proceeding, well before the expiration of TEFRA’s 120-day
waiting period, and simultaneously notified the Bedrosians of
their right to elect to convert their items under
§ 6223(e)(3)(B). While the partnership proceeding was still
pending, the IRS initiated a deficiency proceeding against the
Bedrosians to enforce the FPAA, violating TEFRA’s bar
against simultaneous proceedings.

    The Bedrosians did not challenge the FPAA in the
partnership proceeding, nor did they file an election statement
with the IRS to convert their tax items to non-partnership
items. They instead filed a petition in the Tax Court in July
2005 in response to the notice of deficiency the IRS had sent
them in their individual capacities, seeking a redetermination
of the adjustments that flowed from the FPAA. The Tax
Court ruled that it lacked jurisdiction over the Bedrosians’
petition to the extent that the petition challenged partnership-
level adjustments, because such challenges had to have been
raised within the partnership proceeding. See 26 U.S.C.
§ 7422(h) (depriving federal judiciary of subject-matter
jurisdiction in individual tax refund challenges involving
“partnership items”).
                     BEDROSIAN V. CIR                       7

    When no Stone Canyon partner challenged the FPAA
within the 150-day challenge period, it became enforceable
in September of 2005. See 26 U.S.C. § 6225(a) (providing
time line for challenging an FPAA). In 2007, Stone Canyon’s
tax-matters partner attempted to challenge the validity of the
FPAA in the Tax Court, arguing that it did not receive the
FPAA because the IRS mailed it to the wrong address, but the
Tax Court ruled that the IRS properly mailed the FSA to the
address provided by the Bedrosians’ accountant.

    The Tax Court’s rulings in both the partnership
proceeding and the Bedrosians’ deficiency proceeding were
appealed to this court. In an unpublished decision, we
affirmed the Tax Court’s ruling that the FPAA was valid. As
to the Bedrosians’ case, we held that we lacked jurisdiction
to review the Tax Court’s non-final dismissal order, and we
remanded the case for further proceedings. See Bedrosian,
358 F. App’x at 870.

    Upon remand to the Tax Court, the Bedrosians moved for
summary judgment, challenging the 1999 and 2000
disallowances as untimely as a matter of law. The Tax Court
denied the motion and then dismissed the action, concluding
that because the Bedrosians’ timeliness challenge to the
underlying partnership adjustments should have been raised
during the partnership proceeding, the court lacked
jurisdiction over the Bedrosians’ petition.

    The Bedrosians then filed this appeal, contending that
there was no valid partnership proceeding in which they
could have challenged the disallowances of the deductions,
because the partnership proceeding had been time-barred
when begun and so should be treated as a legal nullity. See
26 U.S.C. § 6501(a) (imposing three-year maximum
8                    BEDROSIAN V. CIR

limitations period for assessing taxes). They argue in
addition that they properly challenged each tax item at issue
at the partner level notwithstanding any then-pending
partnership proceeding because the items all converted to
non-partnership items under 26 U.S.C. § 6223(e). Finally,
they argue that the IRS intentionally violated TEFRA, and to
such a degree that this court should invalidate the underlying
partnership adjustments. As shown below, none of these
arguments succeeds.

                       DISCUSSION

     The Tax Court correctly determined that it could not
review the Bedrosians’ challenges to the partnership
adjustments as brought in their individual deficiency
proceeding. Disallowances of partnership deductions are
“partnership items” in the sense that they affect the tax
treatment of the entire partnership. See Kaplan v. United
States, 133 F.3d 469, 473 (7th Cir. 1998) (explaining that a
disallowance of partnership deductions is a “prototypical
partnership item” that must be adjudicated at the partnership
level). TEFRA required that “the tax treatment of any
partnership item [including] an adjustment to a partnership
item[] shall be determined at the partnership level.”
26 U.S.C. § 6221; accord 26 U.S.C. § 6221(a) (2019) (“Any
adjustment to a partnership-related item shall be determined
. . . at the partnership level . . . .”); see also 26 U.S.C.
§ 7422(h) (prohibiting partner-level actions for refunds
attributable to partnership items). Accordingly, by not
challenging the Stone Canyon adjustments during the Stone
Canyon partnership proceeding, the Bedrosians forfeited their
opportunity to do so in this deficiency proceeding.
                     BEDROSIAN V. CIR                         9

    The Bedrosians’ efforts to sidestep the Tax Court’s
conclusion are unsupportable. Their contention that the
partnership proceeding was time-barred is itself an item that
affects the entire partnership and so should have been raised
during the partnership proceeding.          The Bedrosians’
contention that their items converted to non-partnership items
is unavailing, as the statutory requirements for a conversion
were not satisfied. And their final contention, that the IRS
acted in bad faith, is one we are not permitted to consider.
We deal with each of these contentions in turn.

I. Statute of Limitations Challenge

    The Bedrosians argue that there was no valid partnership
proceeding in which they could previously have challenged
the FPAA. Their theory is that the FPAA itself issued after
the relevant limitations period had run and so the partnership
proceeding in which the FPAA issued was a legal nullity. See
26 U.S.C. § 6501(a) (imposing three-year limitations period
for assessing taxes).

     The IRS responds that this limitations argument is a
partnership item in the sense that it affects the tax treatment
of the entire partnership and so should have been raised in the
partnership proceeding. The statute plainly says that
partnership items, i.e. items affecting the entire partnership’s
tax treatment, must be raised at the partnership level. See
26 U.S.C. §§ 6221, 6231(a)(3). TEFRA offers a rather
tautological definition of partnership items: A partnership
item is any item that the Secretary of the Treasury decides is
“more appropriately determined at the partnership level than
at the partner level.” 26 U.S.C. § 6231(a)(3). The applicable
Treasury regulations, in turn, define partnership items as all
items that affect the partners’ share of the partnerships
10                   BEDROSIAN V. CIR

income, credit, gain, loss and deduction, as well as the legal
and factual determinations underlying the characterization,
timing, and sum of such items. See 26 U.S.C. § 6231(a)(3);
Treas. Reg. § 301.6231(a)(3)-1(a), (b).

     We have not yet addressed whether a challenge to the
timeliness of an FPAA is a partnership item. Every other
circuit court to consider this issue has held that the FPAA
statute of limitations is a partnership item that must be
litigated in a partnership level proceeding. See Keener v.
United States, 551 F.3d 1358, 1363 & n.3 (Fed. Cir. 2009);
Weiner v. United States, 389 F.3d 152, 156 (5th Cir. 2004);
Davenport Recycling Assocs. v. Comm’r, 220 F.3d 1255,
1260 (11th Cir. 2000); Chimblo v. Comm’r, 177 F.3d 119,
125 (2d Cir. 1999); Kaplan, 133 F.3d at 473; Williams v.
Comm’r, 165 F.3d 30 (6th Cir. 1998) (unpublished table
decision). As the Seventh Circuit aptly observed in Kaplan,
a successful statute-of-limitations claim against an FPAA is
“precisely the type of challenge prohibited by TEFRA in light
of Congress’s decision that such suits are better addressed in
one fell swoop at the ‘partnership level’ than in countless
suits by individual partners.” 133 F.3d at 473.

    We therefore join our sister circuits in concluding that a
partner’s statute-of-limitations challenge to an FPAA
constitutes a partnership item that must be raised at the
partnership level. If a taxpayer fails to raise the argument
during the relevant partnership proceeding, the taxpayer
forfeits the right to raise that challenge in a deficiency
proceeding. The Bedrosians therefore forfeited their right to
challenge the timeliness of the disallowances contained
within Stone Canyon’s FPAA because they never raised that
argument during the Stone Canyon partnership proceeding.
The Bedrosians’ attempt to attack the FPAA collaterally, by
                      BEDROSIAN V. CIR                        11

raising timeliness arguments for the first time in their
deficiency proceeding, is unavailing. The Tax Court did not
err in so concluding.

II. Conversion Under 26 U.S.C. § 6223(e)

    The Bedrosians next argue that all tax items at issue in
this case converted to non-partnership items under 26 U.S.C.
§ 6223(e) and may therefore be challenged at the partner
level, notwithstanding any opportunity they may have had to
challenge them during the Stone Canyon partnership
proceeding.

    Section 6223(e)(3)(B) provides a remedy for taxpayers
when the IRS does not provide partners with adequate notice
before issuing an FPAA. Here, the IRS concedes that the
Bedrosians were entitled to convert their items under
§ 6223(e)(3)(B) because the IRS issued the Stone Canyon
FPAA prematurely, well before the expiration of TEFRA’s
120-day waiting period. See 26 U.S.C. §§ 6223(e)(1)(A),
(d)(1) (waiting period). To effectuate a conversion under this
provision, however, the taxpayers are required to file, within
45 days of the untimely notice, a statement of election with
the IRS that clearly states their intention to convert under
§ 6223(e)(3). The then-applicable temporary Treasury
regulations, which prescribed the election procedures,
provided that “[t]he election shall be made by filing a
statement with the Internal Revenue Service office . . . [and
t]he statement shall . . . [b]e clearly identified as an election
under section 6223(e) . . . or . . . [s]pecify the election being
made.” Temp. Treas. Reg. § 301.6223(e)-2T(c). If no
election is made, the taxpayer is bound by the FPAA. See
26 U.S.C. § 6223(e)(3) (“[P]artner shall be a party to the
[partnership] proceeding unless such partner elects—(B) to
12                   BEDROSIAN V. CIR

have the partnership items of the partner for the partnership
taxable year to which the proceeding relates treated as
nonpartnership items.”).

     Here, the Bedrosians concede that they did not file an
election statement with the IRS. They contend, however, that
their petition in this case “substantially complied” with the
statute’s election requirement.        They argue that, by
challenging the disallowance of partnership deductions in
their deficiency proceeding, they sufficiently demonstrated
their desire to convert their partnership items to non-
partnership items.       Substantial compliance, however,
demands more. To be deemed to have substantially complied
with § 6223(e)(3)(B), a taxpayer must, at a minimum, have
provided a “clear expression” of the “intention to elect.”
Fischer Indus., Inc. v. Comm’r, 87 T.C. 116, 122 (1986); see
also Atl. Veneer Corp. v. Comm’r, 812 F.2d 158, 161 (4th
Cir. 1987). The Bedrosians’ petition in this case contained no
such clear expression of their intention to elect. In fact, the
petition said nothing about making an election or a
conversion, nor did the petition mention § 6223(e)(3).
Further, the Bedrosians’ petition was filed in the Tax Court;
election statements must be filed in a designated IRS office.
See Temp. Treas. Reg. § 301.6223(e)-2T. And the
Bedrosians filed their petition long after the 45-day deadline
to file a statement of election. See id.

    Because the Bedrosians did not substantially comply with
the requirements for a conversion under § 6223(e)(3), they
are bound by the FPAA, and they may not challenge the
underlying partnership adjustments at the partner level. See
26 U.S.C. § 6223(e)(3).
                     BEDROSIAN V. CIR                      13

III.   Questioning IRS Motives

    The Bedrosians finally contend that the IRS knowingly
and intentionally violated TEFRA procedures in order to
enforce an invalid FPAA against them, and they assert that
these bad faith procedural violations provide a basis for
invalidating the underlying tax assessments.

    The IRS’s motive for issuing a deficiency notice is
irrelevant to the court’s de novo review of whether the
underlying tax determination is valid. See Scar v. Comm’r,
814 F.2d 1363, 1368 (9th Cir. 1987) (explaining the general
rule that courts cannot “look behind a deficiency notice to
question the Commissioner’s motives and procedures leading
to a determination”); see also Clapp v. Comm’r, 875 F.2d
1396, 1400–01 (9th Cir. 1989) (confirming general rule). The
Bedrosians identify no valid reason to depart from this rule.
The Tax Court did not err when it declined to consider the
IRS’s motives for pursuing the partnership proceeding and
the deficiency proceeding simultaneously.

    There is an exception in which the IRS’s motives for
issuing a notice may be relevant to a taxpayer’s liability. It
is contained in 26 U.S.C. § 6231(g)(2), which provides that
a deficiency proceeding that is invalid as brought against a
TEFRA partnership may be treated as valid if the IRS
reasonably but mistakenly thought that the partnership was
not subject to TEFRA. The Tax Court sua sponte addressed
this exception below, and the majority held that the exception
did not apply. The Bedrosians elected not to challenge that
holding on appeal, presumably because the argument, if
successful, would absolve the IRS from TEFRA’s procedural
requirements entirely, and the Bedrosians’ core contentions
14                 BEDROSIAN V. CIR

on appeal depend on TEFRA’s protections. The § 6231(g)(2)
exception, therefore, is not before us.

                    CONCLUSION

    The Bedrosians have, in essence, used their deficiency
proceeding to collaterally attack the Stone Canyon
FPAA—an FPAA that this court has previously upheld as
valid. The Bedrosians had an opportunity to challenge the
FPAA during the Stone Canyon partnership proceeding, but
they elected not to do so.

     AFFIRMED.
