                        T.C. Memo. 2009-158



                      UNITED STATES TAX COURT



  MICHAEL O. WILLIAMS AND SHERYL ANNE WILLIAMS, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 25205-07.            Filed June 30, 2009.



     Steven R. Mather and Elliott H. Kajan, for petitioners.

     Linette B. Angelastro, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   In notices of deficiency, respondent

determined penalties with respect to petitioners’ 1990-96 Federal

income taxes, as follows:
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                                     Penalty
              Year                 Sec. 6662(a)

              1990                  $7,493.40
              1991                   9,806.60
              1992                  15,434.00
              1993                  18,797.20
              1994                   8,781.60
              1995                   3,652.40
              1996                     997.80

The issue for decision is whether the periods of limitations on

assessment expired for affected items upon which the penalties at

issue are based.   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.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioners resided in California at the time their petitions

were filed.

     From about 1971 through 1998 Walter J. Hoyt III and other

members of the Hoyt family organized, promoted, and operated

numerous cattle and sheep-breeding partnerships (Hoyt

partnerships), as most recently described in Keller v.

Commissioner, __F.3d__ (9th Cir. June 3, 2009).   Petitioners

participated in Shorthorn Genetic Engineering 1982-1 (SGE 1982),

Shorthorn Genetic Engineering 1986-C (SGE 1986), and Shorthorn

Genetic Engineering 1990-1 (SGE 1990), all Hoyt partnerships.
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Petitioners received Schedules K-1, Partner’s Share of Income,

Credits, Deductions, etc., that reported losses for SGE 1982, SGE

1986, and SGE 1990.   Petitioners filed joint Federal income tax

returns with attached Schedules E, Supplemental Income and Loss,

claiming the partnership losses, as follows:

        Year              Partnership                Loss

        1990               SGE   1986              $127,490
        1991               SGE   1986               144,680
        1992               SGE   1986               288,420
        1993               SGE   1990               323,350
        1994               SGE   1982               265,015
        1995               SGE   1982               234,319
        1996               SGE   1982               216,497

     The Internal Revenue Service (IRS) determined that SGE 1982,

SGE 1986, and SGE 1990 were subject to provisions of the Tax

Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-

248, 96 Stat. 324, and disallowed the partnerships’ claimed

losses for the years in issue.     The IRS adjusted the TEFRA

partnership items and sent to petitioners Notices of Final

Partnership Administrative Adjustment (FPAAs).     Petitioner

husband, as the tax matters partner, petitioned the Court for

redetermination of partnership adjustments for each of the years

in issue.   The Court determined the FPAAs to be correct and

entered decisions as follows:
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            Year          Docket No.       Decision Entered

            1990          24203-94             5/17/06
            1991          10628-95             5/18/06
            1992          25002-95             5/17/06
            1993          21772-96             5/17/06
            1994          15627-98             5/23/06
            1995          13603-99             5/17/06
            1996          16559-99             5/18/06

     The IRS’s TEFRA unit determined the percentage of the

affected items attributable to petitioners, as an individual

partner, for each year.    IRS Forms 4700-T, TEFRA Workpapers,

reflected the resulting income adjustments and also showed “1 Yr

Date[s]” indicating that the 1-year assessment dates after the

Court’s final decisions were August 3, 2007, for 1993, August 14,

2007, for 1990, 1992, and 1995, and August 15, 2007, for 1991,

1994, and 1996.    Other internal IRS documents showed a “1-Year

Assessment Date” of August 14, 2007, for 1990, 1992, 1993, and

1995, August 15, 2007, for 1991 and 1996, and August 20, 2007,

for 1994.   For each tax year in issue, the TEFRA unit generated a

Form 4549, Income Tax Examination Changes, dated August 8, 2007,

which reported the section 6662(a) penalty that resulted because

of the affected items adjustments.      On August 9, 2007, the TEFRA

unit sent to petitioners the notices of deficiency (which

included the Forms 4549) that are the bases of this case.     The

TEFRA unit then sent petitioners’ file to the IRS’s Centralized

Case Processing (CCP).
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     Because fewer than 60 days remained before the assessment

statute expiration dates (ASEDs) for the affected items, CCP

submitted to the IRS’s Revenue Accounting department (Revenue

Accounting) Forms 2859, Request for Quick or Prompt Assessment,

to ensure quick (manual) assessments.    The Forms 2859 show ASEDs

of August 15, 2007, for all the years in issue.    Revenue

Accounting, having delegated authority to make quick assessments,

“journaled” the assessments and assigned Document Locator Numbers

(DLNs) onto a “23-C document” that was signed by an assessment

officer and dated August 15, 2007.     DLNs assigned to petitioners’

file, one for each year in issue, contained the number sequence

227, which corresponds to the number of days in calendar year

2007 from January 1 to August 15.    A tape was created containing

the information journaled by Revenue Accounting; the information

on the tape was entered into the IRS computer systems; and Forms

3552 (Part 3), Notice of Tax Due on Federal Tax Return, were

generated with the DLNs confirming that the actual assessments

had been made.   Petitioners received copies of the Forms 3552,

which showed “Date of This Notice” fields as August 15, 2007, but

which were postmarked August 21, 2007.

     Petitioners requested and received IRS account transcripts

of all years in issue.   The transcripts were dated August 20,

2007, but did not reflect any assessments as having been made on

August 15, 2007.   Later account transcripts, dated September 4,
                                 - 6 -

2007, did reflect the August 15, 2007, assessments.    Forms 2866,

Certificate of Official Record, and internal IRS case histories

of petitioners show the assessment dates for the affected items

as having been made on August 15, 2007, for all the years in

issue.    For trial purposes only, this case was consolidated with

another case involving petitioners--docket No. 21031-07L,

relating to collection of a partnership adjustment assessed for

1996.    See T.C. Memo. 2009-159, filed this date.

                               OPINION

     Petitioners’ sole argument is that the IRS did not timely

assess the affected items that resulted from the FPAA proceedings

and that led to the penalties at issue.    Without timely

assessments of these affected items, petitioners contend that

there are no underpayments on which to base section 6662(a)

accuracy-related penalties.    Respondent argues that the affected

items were timely assessed on August 15, 2007, and that the

penalties at issue are proper.    Petitioners concede that the

section 6662(a) penalties are appropriate if the Court determines

that the assessments were timely.

        Because the related partnership tax years occurred before

August 5, 1997, the accuracy-related penalties are properly

contested before the Court at the partner level.     See secs. 6221,

6230(a)(2)(A)(i).    But cf. Fears v. Commissioner, 129 T.C. 8, 10

(2007) (stating that because Congress, in the Taxpayer Relief Act
                                 - 7 -

of 1997, Pub. L. 105-34, sec. 1238(a), 111 Stat. 1026, amended

section 6221 to provide that the applicability of any penalty

(including an accuracy-related penalty) which relates to an

adjustment of a partnership item shall be determined at the

partnership level, the Court lacks jurisdiction to redetermine

the applicability of such penalties at the partner level for

partnership tax years ending after August 5, 1997).     We consider

the timeliness of the assessments of the affected items only to

make a redetermination of the penalties at issue.     The bar of

periods of limitations is an affirmative defense, and petitioners

must show that the assessments were made after the applicable

periods of limitations.    See Rules 39, 142(a); Adler v.

Commissioner, 85 T.C. 535, 540 (1985).

     The general period of limitations on assessment is 3 years.

Sec. 6501(a).    For tax attributable to a partnership and affected

items, however, section 6229(a) extends the general period of

limitations.    Sec. 6501(n).   Section 6229(a) provides, as

follows:

          SEC. 6229(a). General Rule.--Except as otherwise
     provided in this section, the period for assessing any
     tax imposed by subtitle A with respect to any person
     which is attributable to any partnership item (or
     affected item) for a partnership taxable year shall not
     expire before the date which is 3 years after the later
     of--

                (1) the date on which the partnership return
           for such taxable year was filed, or
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                 (2) the last day for filing such return for
            such year (determined without regard to
            extensions).

Furthermore, if an FPAA is mailed to the tax matters partner, the

running of the period specified in section 6229(a) is suspended

for the period during which a court action may be brought under

section 6226 (and if a petition is filed as a result of the FPAA,

until the decision of the court becomes final) and for 1 year

thereafter.   Sec. 6229(d).   In this context, the running of the

section 6229(a) 3-year period of limitations is temporarily

interrupted during the FPAA proceeding until its entered decision

becomes final plus 1 year, and then the remaining unexpired part

of the 3-year limitations period is tacked on.   See Aufleger v.

Commissioner, 99 T.C. 109, 113 (1992).

     The parties agree that section 6229 is applicable in

determining the periods of limitations.   The only controversy is

when the ASEDs occurred with respect to the provisions of section

6229(d).

     Respondent maintains that the earliest ASED possible would

have been August 15, 2007.    Petitioners argue that internal IRS

documents and admissions in respondent’s amended answer show the

ASEDs for some or all the years in issue as being before August

15, 2007.   Respondent’s answer alleged certain dates that were

erroneous as a matter of law.
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     We take judicial notice of the dates this Court entered

decisions for the related partnership cases in issue.      Fed. R.

Evid. 201; see Estate of Reis v. Commissioner, 87 T.C. 1016, 1027

(1986).   Because the decisions were not appealed in these cases,

the final decision dates can be accurately determined by adding

90 days to the dates the decisions were entered.      See secs.

7459(c), 7481(a)(1), 7483.    One year is added to the final

decision dates of the partnership cases to complete the ASED

calculations.   Sec. 6229(d)(2).   The dates of entered decisions,

final decisions, and ASEDs of the section 6229(a) periods of

limitations (as augmented by section 6229(d)) are as follows:

                             Decision      Decision
 Year      Docket No.         Entered        Final             ASED

 1990       24203-94         5/17/06       8/15/06          8/15/07
 1991       10628-95         5/18/06       8/16/06          8/16/07
 1992       25002-95         5/17/06       8/15/06          8/15/07
 1993       21772-96         5/17/06       8/15/06          8/15/07
 1994       15627-98         5/23/06       8/21/06          8/21/07
 1995       13603-99         5/17/06       8/15/06          8/15/07
 1996       16559-99         5/18/06       8/16/06          8/16/07

     In alleging the expiration of the periods of limitations,

petitioners contend that their IRS case history transcripts, as

obtained from the IRS computer systems on August 20, 2007, did

not memorialize any assessments made on August 15, 2007.

However, “The date of the assessment is the date the summary

record is signed by an assessment officer.”    Sec. 301.6203-1,

Proced. & Admin. Regs.
                              - 10 -

     Respondent’s witness, a CCP manager for the IRS whose unit

is responsible for assessments, credibly testified that the

assessments did not appear on the August 20, 2007, transcripts

because they were performed manually.   The witness explained that

this manual treatment requires a longer period to input the

information into the IRS computer systems and, consequently, for

the information to be reflected in petitioners’ transcripts.    The

witness’s explanation for the delay was reasonable and

uncontradicted.

     Petitioners also argue that the Forms 3552, while dated

August 15, 2007, were postmarked August 21, 2007.   While IRS

procedure is usually to mail out Form 3552 on the same day the

assessment is made, the CCP manager testified that all the

appropriate forms and internal steps for quick assessment of

petitioners’ tax liabilities were timely completed and that the

sheer volume of assessments at that time could have caused the

discrepancy between the date of assessments and the date the

Forms 3552 were mailed.

     A presumption of official regularity “supports the official

acts of public officers, and, in the absence of clear evidence to

the contrary, courts presume that they have properly discharged

their official duties.”   United States v. Chem. Found., Inc., 272

U.S. 1, 14-15 (1926); see, e.g., Lillis v. Commissioner, T.C.

Memo. 1983-142, affd. without published opinion 740 F.2d 974 (9th
                               - 11 -

Cir. 1984).   The presumption does not apply where the taxpayer

introduces specific evidence to rebut the presumption.     See

Pietanza v. Commissioner, 92 T.C. 729, 739 (1989), affd. without

published opinion 935 F.2d 1282 (3d Cir. 1991).     Respondent,

through testimony and exhibits, has shown that the IRS followed

numerous internal procedures and reasonable practices to

accomplish timely assessments.   The preponderance of IRS business

records offered into evidence shows that the IRS maintained and

met the appropriate ASEDs.   This evidence is more persuasive than

the erroneous admissions in respondent’s amended answer or the

circumstantial evidence relied on by petitioners.

     We have considered the other arguments of the parties, and

they are either without merit or need not be addressed in view of

our resolution of the issue.

     To reflect the foregoing,


                                        Decision will be entered

                                  for respondent.
