Cir

MEMORANDUM

Melvin and Brooke Ashland appeal from a decision of the Tax Court dismissing for lack of subject matter jurisdiction the issue of whether they properly deducted in 2002 an alleged distribution from Cutler & Co. LLC. We have jurisdiction under 26 U.S.C. § 7482 and review questions of law de novo and factual findings for clear error. See Meruelo v. C.I.R., 691 F.3d 1108, 1114 (9th Cir.2012). We affirm.

As an LLC, Cutler is treated as a partnership for tax purposes. 26 C.F.R. § 301.7701-3 (b). Its alleged guaranteed payment to Brooke Ashland was a “partnership item,” 26 C.F.R. § 301.6231 (a)(3)-1(a)(2), and the issue of whether it made this payment must be decided at the partnership level. 26 U.S.C. § 6221 . In the present individual deficiency proceeding, the Tax Court lacked jurisdiction to determine whether the payment was made. See Bergford v. C.I.R., 12 F.3d 166 , 170 (9th Cir.1993).

The Ashlands argue that Cutler is covered by the “small partnership” exception, under which “[t]he term ‘partnership’ shall not include any partnership having 10 or fewer partners each of whom is an individual ..., a C corporation, or an estate of a deceased partner.” 26 U.S.C. § 6231…