Nehrlich

MEMORANDUM **

Petitioner argues that the Internal Revenue Service (“IRS”) erroneously applied the partnership audit and litigation procedures under the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) to JTA Research (“JTA”) during an audit in 1995. He contends that JTA fell within the small partnership exception to TEFRA. But he concedes that a partnership does not fall under that exception if it allocates certain partnership items, including deductions, unequally among the partners, and that JTA’s 1995 return had on its face unequally allocated an item under the category of “other deductions.”

Petitioner argues that the IRS should have recognized that this “other deductions” entry was an error. The United States Tax Court (“Tax Court”) has explained, however, that “the partners and partnership bear the risk of erroneously being or not being classified as a small partnership. Respondent [IRS] should not be required to make this determination at [its] peril.” Harrell v. Comm’r of Internal Revenue, 91 T.C. 242, 247 (1988). As a result, a partner or representative of a partnership is not permitted “to claim a result other than that identified in the return and K-ls as…