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Attorney who prepared partnership returns was "preparer" of limited partners' returns.

Goulding, a CPA and attorney, was legal counsel for three tax-shelter-type limited partnerships. He prepared the partnership returns and the schedules K-1. Goulding had no contact with the limited partners, did not advise them on partnership deductions and did not prepare their individual tax returns.

The IRS said Goulding was a "preparer" of the schedules K-1 and assessed penalties against him for negligent preparation of the K-1s (under the prior-law version of IRC section 6694).

The IRS relied on regulation 301.7701-15(b)(3) to judge Goulding a preparer. Goulding, however, claimed the regulation was invalid, and he could not have been a preparer of the limited partners' returns because a single entry from the K-1 could not constitute a "substantial portion" of a return [as required by section 7701(a)(36)] and because the limited partners did not compensate him.

Result: For the IRS. The regulation is valid. Goulding was a preparer of the limited partners' returns.


Here are two of the tax cases the Supreme Court recently agreed to review.

* Newark Morning Ledger Co. The Third Circuit Court of Appeals disallowed depreciation deductions a newspaper publisher had claimed on a list of current subscribers. The publisher had bought the list as part of the acquisition of a publishing corporation.

* Soliman. In this home-office-deductions case, the Fourth Circuit Court of Appeals upheld the Tax Court's "facts and circumstances" approach to whether a home office is a taxpayer's "principal place of business."

A self-employed anesthesiologist was allowed to deduct home office expenses even though he didn't see patients in his home. Instead, he spent two to three hours in the home office performing administrative tasks. The hospitals at which he rendered services to patients did not provide him with an office, and the administrative tasks were essential to his practice. (See "Lifting the Cloud on Home Office Deductions," by Victor Cuciniello, JofA, July91, page 41).
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Article Details
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Author:Wagenbrenner, Anne
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jun 1, 1992
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