                         T.C. Memo. 2009-305



                      UNITED STATES TAX COURT



          THOMAS AND DEBORAH MCINTYRE, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 24581-07, 21997-08.     Filed December 23, 2009.



     Terri A. Merriam and Adam J. Blake, for petitioners.

     Nhi T. Luu, for respondent.



                           MEMORANDUM OPINION


     KROUPA, Judge:    These consolidated cases are before the

Court on respondent’s motion to dismiss for lack of jurisdiction

and to strike partnership items and a theft loss claim from

taxable year 1998.    Both cases are partner-level proceedings

involving this Court’s jurisdiction under the partnership
                               -2-

provisions of the Tax Equity and Fiscal Responsibility Act of

1982 (TEFRA), Pub. L. 97-248, sec. 402, 96    Stat. 648.

     Petitioners were partners in various Hoyt-related1 TEFRA

partnerships in 1995 and 1996 and received distributive shares of

the partnerships’ losses for those years.    Petitioners’

partnership losses for 1996 also generated a net operating loss

(NOL) that petitioners carried back to 1994.2   Respondent issued

petitioners affected items deficiency notices (affected items

notices) for 1994, 1995 and 1996 disallowing the losses after the

related partnership-level proceedings had concluded.3      The

affected items are section 6662(a)4 accuracy-related penalties




     1
      The partnerships were organized, promoted, sold, and
managed by Jay Hoyt. Hoyt organized over 100 similar “investor”
partnerships for owning and breeding cattle. This Court
determined in 2000 that Hoyt cattle operations constituted a tax
shelter. Durham Farms #1, J.V. v. Commissioner, T.C. Memo. 2000-
159, affd. 59 Fed. Appx. 952 (9th Cir. 2003). Respondent
subsequently removed all Hoyt income and deductions from the
investor partnership returns, and then he made computational
adjustments to the individual partners’ returns following the
respective partnership proceedings.
     2
      Petitioners’ partnership losses for 1995 also generated a
net operating loss that petitioners carried back to taxable years
1992 and 1993 that are not at issue.
     3
      Docket No. 24581-07 relates to the affected items notices
for 1994 and 1995 that respondent issued on July 26, 2007.
Docket No. 21997-08 relates to the affected items notices for
1995 and 1996 that respondent issued on June 4, 2008.
     4
      All section references are to the Internal Revenue Code in
effect for the years at issue.
                                -3-

based on petitioners' underpayments of income tax for those

years.

     We are asked to decide whether we have jurisdiction to

redetermine the accuracy of respondent’s computational

adjustments and petitioners’ entitlement to a 1998 theft loss

offset.   We dealt with this same issue in Hay v. Commissioner,

T.C. Memo. 2009-265.   We hold that this Court lacks jurisdiction

to redetermine respondent’s computational adjustments and the

theft loss offset because this is an affected items deficiency

proceeding.   Accordingly, we will grant respondent’s motion to

dismiss for lack of jurisdiction and to strike the partnership

items and 1998 theft loss claim.

                            Background

     The following information is stated for purposes of

resolving the pending motion.   Petitioners resided in Colorado at

the time they filed the petition.

Computational Adjustments for 1994, 1995, and 1996

     Petitioners were partners in Shorthorn Genetic Engineering

1990-1, Durham Genetic Engineering 1986-2, Durham Genetic

Engineering 1986-3, and Durham Genetic Engineering 1986-4

(collectively, the partnerships) in 1995 and 1996.   Decision

documents for taxable years 1995 and 1996 were entered in the

partnership proceedings beginning in April 2006.
                                  -4-

     Respondent made computational adjustments to petitioners’

tax liabilities for 1995 and 1996 based on the decisions entered

in the partnership proceedings.    Respondent disallowed portions

of petitioners’ distributive shares of losses from the

partnerships for 1995 and 1996 resulting in underpayments for

those years.   Respondent also disallowed the NOL carryback from

1996 to 1994 resulting in an underpayment for 1994.   Respondent

did not remove certain section 1231 gain for 1995 that

petitioners claim was related to the Hoyt investment and should

have been removed.   Respondent determined petitioners were liable

for section 6662(a) accuracy-related penalties for the

underpayments for 1994, 1995, and 1996.   Respondent issued

petitioners the affected items notices for those years, which are

at issue in this proceeding.

1998 Theft Loss Carryback

     Petitioners filed amended returns for 1995, 1996 and 1998.

Petitioners claimed a $70,619 personal theft loss from the Hoyt

investment on the amended return for 1998.   Petitioners sought to

have the alleged overpayment of income tax for 1998 carried back

to reduce the deficiency on the amended return for 1995 and then

carried forward to reduce the deficiency for 1996.

     Respondent informed petitioners six years ago that

respondent would refrain from processing petitioners’ amended

returns until the partnership proceedings were completed.     As
                                  -5-

previously noted, the partnership proceedings concluded in 2006.

Despite the three years since the partnership proceedings’

conclusion, respondent has not processed the amended returns for

1995, 1996 and 1998, nor has respondent issued petitioners a

deficiency notice for 1998.    Petitioners filed a claim of

erroneous computation with respondent to obtain a refund and also

raise the theft loss issue in this proceeding to compel

respondent to process their returns.       Rather than processing

their returns, respondent filed the pending motion to dismiss for

lack of jurisdiction and to strike the partnership items and the

theft loss claim from 1998.

                              Discussion

     We begin our analysis with a discussion of our jurisdiction

over a TEFRA partner-level proceeding.5      This Court is a court of

limited jurisdiction, and we may exercise jurisdiction only to

the extent provided by statute.    Sec. 7442; GAF Corp. & Subs. v.

Commissioner, 114 T.C. 519, 521 (2000).       Our jurisdiction to

redetermine a deficiency in tax depends on a valid deficiency

notice and a timely filed petition.     GAF Corp. & Subs. v.

Commissioner, supra at 521.    A taxpayer may generally file a



     5
      Congress enacted the unified audit and litigation
procedures of the Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA) to provide consistent treatment among partners in
the same partnership and to ease the administrative burden that
resulted from duplicative audits and litigation. See Petaluma FX
Partners, LLC v. Commissioner, 131 T.C. 84, 90 (2008).
                                   -6-

petition for redetermination of a deficiency with this Court

after receiving a deficiency notice.       Sec. 6213.   Our

jurisdiction to redetermine the deficiency for a given year is

limited, however, by the deficiency notice issued by the

Commissioner.    Sec. 6214.   Furthermore, normal deficiency

procedures apply only to affected items requiring partner-level

factual determinations and do not apply to computational

adjustments.    See sec. 6230(a)(2)(A).6

I.   Computational Adjustments for 1994, 1995, and 1996

      We must first decide whether we have jurisdiction to

redetermine respondent’s computational adjustments following the

partnership proceedings.      Petitioners ask us to redetermine the

computational adjustments by reconsidering partnership items that

were finally determined in the related partnership-level

proceedings.    Specifically, petitioners ask us to remove Hoyt-

related section 1231 gain from the computation for 1995.

Petitioners also ask us to determine that they were not partners

in a Hoyt partnership in 1996 and that respondent therefore

improperly disallowed the losses for that year and the NOL

carryback to 1994.    Respondent contends that we lack jurisdiction



      6
      The Taxpayer Relief Act of 1997 amended sec. 6230(a)(2)(A)
to exclude “penalties, [and] additions to tax * * * that relate
to adjustments to partnership items” from deficiency proceedings,
effective for partnership years ending after Aug. 5, 1997.
Taxpayer Relief Act of 1997, sec. 1238, Pub. L. 105-34, 111 Stat.
788 (1997).
                                -7-

to redetermine computational adjustments based on partnership

items in an affected items proceeding.   We agree with respondent.

     We have consistently held that we lack jurisdiction under

the TEFRA rules to redetermine an underpayment attributable to

partnership items in an affected items deficiency proceeding.

Crowell v. Commissioner, 102 T.C. 683, 689 (1994); Saso v.

Commissioner, 93 T.C. 730, 734 (1989); Maxwell v. Commissioner,

87 T.C. 783, 788-789 (1986).   The section 1231 gain petitioners

ask us to reconsider is a partnership item that should have been

addressed in the partnership proceedings.   See sec.

301.6231(a)(3)-1(a)(1), Proced. & Admin. Regs.   Final decisions

for 1995 and 1996 have already been entered at the partnership

level.   We hold, therefore, that we lack jurisdiction to

redetermine respondent’s computational adjustments for 1995 in

this proceeding.

     Petitioners make a second argument regarding the

computational adjustments for 1996.   Petitioners argue that

respondent improperly disallowed the losses claimed on the return

for 1996 and carried back to 1994 as Hoyt related because

petitioners were not involved in any Hoyt partnerships in 1996.

We lack jurisdiction to determine in this proceeding whether

petitioners were partners in a Hoyt partnership in 1996.    Partner

status is a partnership item where it is necessary to know who

the partners are when determining each partner’s distributive
                                -8-

share.   Blonien v. Commissioner, 118 T.C. 541, 551 (2002).

Respondent’s computational adjustments after the 1996 partnership

proceedings were based on petitioners’ distributive share of

partnership losses.   Petitioners should have raised the argument

that they were not partners in 1996 at the partnership

proceeding.   They cannot raise it now.   We lack jurisdiction to

determine whether the losses were improperly disallowed because

petitioners’ status as partners is a partnership item and we lack

jurisdiction to redetermine deficiencies attributable to

partnership items in an affected items deficiency proceeding.

See Crowell v. Commissioner, supra; Saso v. Commissioner, supra;

Maxwell v. Commissioner, supra.

     Petitioners make a third argument regarding our ability to

redetermine the accuracy-related penalties for each of the years

at issue.   Petitioners maintain we have jurisdiction over the

accuracy-related penalties because they are affected items,

rather than partnership items, and this is an affected items

deficiency proceeding.   We agree with petitioners that the

accuracy-related penalties are affected items because they are

based on tax petitioners owe as a result of adjustments to

partnership items on the partnership returns.   See Olson v.

Commissioner, T.C. Memo. 1996-384; sec. 301.6231(a)(5)-1T(d),

Temporary Proced. & Admin. Regs., 52 Fed. Reg. 6790 (Mar. 5,

1987).
                                  -9-

      We lack jurisdiction, however, in an affected items

deficiency proceeding as here to redetermine liability for

affected items that do not require partner-level factual

determinations.   See sec. 6230(a); Brookes v. Commissioner, 108

T.C. 1, 5 (1997); Crowell v. Commissioner, supra; N.C.F. Energy

Partners v. Commissioner, 89 T.C. 741, 744-745 (1987).      We have

repeatedly held that we lack jurisdiction in an affected items

deficiency proceeding to redetermine the Commissioner’s

computational adjustments.   Brookes v. Commissioner, supra at 5;

Bradley v. Commissioner, 100 T.C. 367, 371 (1993); Saso v.

Commissioner, supra at 734; Kohn v. Commissioner, T.C. Memo.

1999-150; Olson v. Commissioner, supra.    Accordingly, we find

that we lack jurisdiction to redetermine respondent’s

computational adjustments for 1994, 1995, and 1996 in this

partner-level proceeding.

II.   1998 Theft Loss Carryback to 1995 and 1996

      The next issue we must decide is whether we have

jurisdiction to offset petitioners’ 1995 and 1996 deficiencies

with the theft loss petitioners claimed on the amended return for

1998.   Respondent argues that this Court lacks jurisdiction to

determine whether petitioners are entitled to the 1998 theft loss

carryback because we lack jurisdiction to redetermine the

deficiencies for 1995 and 1996.    We agree.
                               -10-

     Generally this Court has jurisdiction to consider the later

years not before the Court that may be necessary to correctly

redetermine the deficiency for the years currently before the

Court.   Sec. 6214(b); Vincentini v. Commissioner, T.C. Memo.

2008-271.   We have already decided, however, that we lack

jurisdiction to redetermine the deficiencies for 1995 and 1996

because the deficiencies are attributable to partnership items

and we lack jurisdiction to redetermine deficiencies attributable

to partnership items in an affected items proceeding.    Moreover,

petitioners cannot confer jurisdiction where none exists.    See

Evans Publg., Inc. v. Commissioner, 119 T.C. 242, 249 (2002).

Accordingly, we conclude that we lack jurisdiction to determine

whether petitioners are entitled to a 1998 theft loss carryback

to tax years 1995 and 1996.7

     To reflect the foregoing and the concessions of the parties,


                                           An appropriate order will

                                      be issued.




     7
      We note that our holding does not bar petitioners from
seeking future relief on these issues. Petitioners may challenge
respondent’s computational adjustments for 1994, 1995 and 1996 by
paying them and filing a claim for a refund. See sec. 6230(c).
