Rawls Trading, L.P., Rawls Management Corporation, Tax Matters Partner,et al. v. Commissioner , 138 T.C. 271 ( 2012 )

RAWLS TRADING, L.P., RAWLS MANAGEMENT CORPORATION,
TAX MATTERS PARTNER, ET AL., 1 PETITIONERS
v. COMMISSIONER OF INTERNAL REVENUE,
RESPONDENT
Docket Nos. 12937–07, 12938–07, Filed March 26, 2012.
14880–07.
R simultaneously issued notices of final partnership
administrative adjustment (FPAAs) to two lower tier or
‘‘source’’ partnerships and one upper tier or ‘‘interim’’ partner-
ship. The FPAA issued to the interim partnership purports to
give effect only to the adjustments shown on the FPAAs
issued to the source partnerships. Ps petitioned the Court
challenging all three FPAAs, and the three partnership pro-
ceedings were consolidated. R subsequently asked to stay the
1 Cases of the following petitioners are consolidated herewith: Rawls Family, L.P., Rawls Man-
agement Corporation, Tax Matters Partner, docket No. 12938–07; and Rawls Group, L.P., Rawls
Family, L.P., Rawls Management Corporation, Jerry Rawls and the Jerry S. Rawls Business
Trust, Jerry Rawls, Trustee, Partners Other Than the Tax Matters Partner, docket No. 14880–
07.
271
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272 138 UNITED STATES TAX COURT REPORTS (271)
proceeding for the interim partnership, conceding that the
underlying FPAA was issued prematurely but asserting that
the FPAA is nonetheless valid and properly confers jurisdic-
tion on the Court. Held: Under the analysis and reasoning
articulated in GAF Corp. & Subs. v. Commissioner, 114 T.C.
519 (2000), as applied to a tiered partnership structure, the
FPAA issued to the interim partnership, which represents
only the impact of the adjustments shown on the FPAAs
issued to the two source partnerships and which was issued
before the completion of the two source partnership pro-
ceedings, is invalid and does not confer jurisdiction on the
Court. Therefore, the Court will, on its own motion, dismiss
the interim partnership proceeding for lack of jurisdiction.
Michael Todd Welty, David E. Colmenero, and Laura L.
Gavioli, for petitioners.
Josh O. Ungerman, for petitioners in docket No. 14880–07.
Elaine H. Harris, David B. Flassing, Julie Ann P. Gasper,
and Mark Edward O’Leary, for respondent.
VASQUEZ, Judge: These three consolidated cases are before
the Court on respondent’s request to stay the proceeding in
one case. The cases constitute partnership-level proceedings
under the unified partnership audit and litigation procedures
of the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA), Pub. L. No. 97–248, sec. 402(a), 96 Stat. at 648 (codi-
fied as amended at sections 6221–6233). 2
Once each during two discrete periods, the first spanning
late March through early April 2000 and the other covering
early August through early September 2000, Jerry S. Rawls
engaged in the short sale variant of the ‘‘Son-of-BOSS’’ tax
shelter, 3 employing several newly formed entities. These
included: Rawls Family, L.P. (Family), Rawls Group, L.P.
(Group), and Rawls Trading, L.P. (Trading), each of which
sought to be characterized as a partnership for tax pur-
poses. 4 As more fully discussed below, these purported part-
2 Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986,
as amended and in effect for the tax year at issue, 2000, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
3 See Kligfeld Holdings v. Commissioner, 128 T.C. 192 (2007) (providing a detailed description
of the shelter).
4 Where applicable, and for narrative convenience only, we adopt some of the terms that Mr.
Rawls and others associated with these entities had used to describe the transactions at issue.
Such terms include ‘‘partner(s)’’, ‘‘partnership’’, and ‘‘L.P.’’ Our use of any of these terms does
not constitute, and should not be construed as, a finding that the legal status or relationship
conveyed by that term in fact existed at the relevant time.
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 273
nerships were arranged in a ‘‘tiered’’ structure, with Family
holding ownership interests in Group and Trading.
Group and Trading were the entities in which the ‘‘shel-
tering’’ transactions, which allegedly subsequently generated
losses, originated. Because Group and Trading were the
source of the putative losses, we refer to them as the ‘‘source’’
partnerships. The claimed losses resulted from transactions
overstating the bases of partnership interests in the source
partnerships. These overstated bases supposedly flowed
through to Family, which used them to ‘‘fabricate’’ losses.
These contrived losses eventually inured to Mr. Rawls’ tax
benefit through other passthrough entities. Because it was
interposed between the source partnerships, on the one hand,
and Mr. Rawls, on the other, we refer to Family as the
‘‘interim’’ partnership.
Using this pyramid-like partnership structure, in which
overstated bases purportedly achieved in the source partner-
ships tiered up through the interim partnership to his ben-
efit, Mr. Rawls claimed tax savings of approximately $11 mil-
lion. 5 Respondent, by means of notices of final partnership
administrative adjustment (FPAAs) issued to Family, Group,
and Trading, disallowed the losses at the respective partner-
ship level and asserted accuracy-related penalties under sec-
tion 6662(a) and (h). 6 The tax matters partners (TMPs) of
Family and Trading and a participating partner of Group
brought these consolidated actions on behalf of their respec-
tive entities.
After having issued the FPAAs, respondent now contends,
in effect, that the FPAA to Family was premature.
Respondent has asked the Court to stay the proceeding with
respect to Family until the partnership-level proceedings for
Group and Trading have been resolved. The issues that we
decide here are: (1) whether the Family FPAA is valid and
properly confers jurisdiction on us over the Family case; and
5 This figure represents the taxes that would otherwise have been owing on the long-term cap-
ital gains claimed to have been sheltered by the alleged losses. As mentioned infra Findings
of Fact, pt. II.A., Mr. Rawls arranged a sale of shares of common stock that he had held for
several years in a company which was subsequently publicly listed and traded, at the interim
partnership level. The net proceeds of this sale amounted to $61,052,041.70. Because Mr. Rawls
had a negligible basis in these shares, almost the total net proceeds would have constituted
long-term capital gains and been subject to a 20% tax rate. We note that Mr. Rawls’ personal
income taxes are not at issue in these partnership-level proceedings.
6 On March 17, 2009, the Court granted petitioners’ motion to consolidate the cases for trial,
briefing, and opinion.
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274 138 UNITED STATES TAX COURT REPORTS (271)
(2) if we have jurisdiction, whether we should grant respond-
ent’s motion and stay proceedings in the Family case until
we have entered our decisions in the Group and Trading
cases and our decisions have become ‘‘final’’ within the
meaning of section 7481(a)(2)(A).
FINDINGS OF FACT
I. Jerry S. Rawls
Mr. Rawls earned a bachelor of science degree in mechan-
ical engineering from Texas Tech University and a master of
science degree in industrial administration from Purdue
University. From 1968 through 1988 he worked for Raychem
Corp., where he began as a sales engineer and eventually
rose to general manager of two divisions within the company.
Mr. Rawls cofounded the fiber optics company Finisar
Corp. (Finisar) in 1989. Upon formation of Finisar, Mr.
Rawls received a portion of its outstanding shares of common
stock. Since the company’s inception, Mr. Rawls has served,
variously, as Finisar’s president, chief executive officer, or
chairman of the board.
By 1999 Finisar had become the nation’s leading provider
of fiber optic subsystems and network performance tests. On
November 11, 1999, Finisar announced an initial public
offering (IPO) of its common stock. On November 17, 1999,
Finisar made an IPO of 8,150,000 shares. At the time of the
IPO, Mr. Rawls owned 8,470,627 shares of Finisar stock,
which represented 20.2% of Finisar’s outstanding common
stock. 7 However, because of his position at the company, Mr.
Rawls was subject to a ‘‘lock up’’ that precluded him from
selling his Finisar shares in the IPO and for a six-month
period thereafter.
Around the time of the IPO, Mr. Rawls had no personal will
or estate plan in place, he had no personal lawyers, and his
Finisar holdings made up substantially all of his net worth.
Between February and March 2000, Mr. Rawls was busy
traveling the country in advance of an upcoming secondary
offering of Finisar’s common stock, scheduled for later that
spring. Mr. Rawls intended to sell approximately 600,000
7 Mr. Rawls’ stock ownership in Finisar represented approximately 28% of the company’s out-
standing common stock before the IPO.
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 275
shares of his Finisar common stock in this secondary
offering.
II. The Transactions
On December 8, 1999, Steven J. Lange, a representative
from the Heritage Organization, L.L.C. (Heritage), 8 made an
unsolicited call to Mr. Rawls to discuss Heritage’s services.
According to Mr. Lange’s summary of that call, he explained
to Mr. Rawls that Heritage does ‘‘work in capital gains for
large capital gains, actually eliminating the capital gains
taxes and [they] do estate planning, dropping estate taxes
down to 15[%]’’. Mr. Rawls agreed to meet with a Heritage
representative in person. Mr. Rawls met with various Herit-
age representatives several times between December 1999
and early 2000.
Heritage referred Mr. Rawls to Lewis, Rice, Fingerlish
(Lewis Rice), a law firm to which Heritage had previously
referred five clients in the preceding two years. Mr. Rawls
paid Lewis Rice a fee of $150,000 for its services, which
included a written tax opinion for the transactions relating
to Trading. 9
During March and early April 2000, Heritage and Mr.
Rawls discussed strategies aimed at significantly reducing
capital gains taxes that he would owe on any future sale of
his Finisar stock. Initially, Heritage and Mr. Rawls con-
templated a strategy seeking to ‘‘inflate’’, or overstate, the
basis of Mr. Rawls’ Finisar stock before its sale.
The strategy envisaged entering into a short sale of
Treasury notes and transferring the proceeds of the short
sale (along with the obligation to close the short sale) to a
partnership. The desired tax result was an inflated ‘‘outside
basis’’ in the partnership. 10 The idea was to ‘‘impute’’ this
8 Heritage filed a voluntary petition for relief under ch. 11 of the Bankruptcy Code on May
17, 2004. See In re Heritage Org., L.L.C., 375 B.R. 230, 238–242 (Bankr. N.D. Tex. 2007) (dis-
cussing Heritage’s activities and its relationship with its clients, as conducted before the filing
of the bankruptcy petition).
9 In addition, on or around May 5, 2000, Mr. Rawls effectively paid a fee of $4,472,062 to Her-
itage for its services. The fee was arranged through the Jerry S. Rawls Business Trust (ESBT).
Mr. Rawls was the sole grantor, trustee, and beneficiary of ESBT. See infra pt. II.A.
10 Outside basis refers to the basis of a partner’s partnership interest. See generally sec. 722
(providing that the basis of a partner’s partnership interest acquired by the contribution of prop-
erty other than money is the basis of the contributed property; and the basis of a partner’s part-
nership interest acquired by the contribution of money is the amount of money contributed); sec.
752(a) (providing that the basis of a partner’s partnership interest is increased to the extent
Continued
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276 138 UNITED STATES TAX COURT REPORTS (271)
inflated outside basis to Mr. Rawls’ Finisar stock before it
was sold. To achieve this, Mr. Rawls would have previously
arranged for a contribution of his Finisar stock to the part-
nership. This stock would then have been received back in a
liquidating distribution from the partnership. Presumably, it
would have been claimed, under authority of section 732(b),
that the Finisar stock was being received back with a basis
equal to the inflated outside basis in the partnership.
However, this strategy for inflating the basis of Finisar
stock before its sale was subsequently discarded in favor of
a more complex strategy involving two partnerships. It was
envisaged that the two partnerships would eventually be
arranged in a tiered structure, with one almost entirely
owned by the other. The objective of this strategy was to
‘‘manufacture’’ a short-term capital loss in the upper tier
partnership. The loss would then be proclaimed to be avail-
able to offset capital gains that the upper tier partnership
would realize by selling Finisar stock, previously contributed
to it.
Engineering the short-term capital loss contemplated, in
the first instance, inflating the outside basis of a partner-
ship—the partnership that would become the lower tier part-
nership. The notion was to impute this inflated outside basis
to the assets of another partnership—the partnership that
would become the upper tier partnership. As a consequence
of the tiered partnership structure, the erstwhile inflated
outside basis in the lower tier partnership would become the
overstated ‘‘inside basis’’ of assets held by the upper tier
partnership. 11 These assets would comprise substantially all
of the partnership interests in the lower tier partnership.
of the partner’s increased share of partnership liabilities); sec. 752(b) (providing that the basis
of a partner’s partnership interest is decreased to the extent of the partner’s decreased share
of partnership liabilities); sec. 705 (providing rules for subsequent adjustments to the basis of
a partner’s partnership interest, following its initial determination at the time of original acqui-
sition, to reflect the partnership’s operating results and the partner’s distributive shares of part-
nership income, gain, loss, deduction, and credit); sec. 733 (providing rules for adjustments to
the basis of a partner’s partnership interest to account for distributions from the partnership
to the partner).
11 Inside basis refers to the partnership’s basis in partnership property. See generally sec. 723
(providing that the basis of property contributed to a partnership by a partner shall be the ad-
justed basis of such property to the contributing partner at the time of contribution, increased
by the amount of any gain recognized at contribution); sec. 734 (providing rules for the adjust-
ment of basis in partnership property to account for distributions if the partnership has made
an election under sec. 754); sec. 743 (providing rules for the adjustment of basis in partnership
property to account for transfers of partnership interest if the partnership has made an election
under sec. 754).
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 277
The upper tier partnership would subsequently sell these
partnership interests, at a price reflecting their true eco-
nomic value rather than their overstated basis. A short-term
capital loss would allegedly be realized as a result of this
sale.
As would have been the case in the discarded strategy for
inflating the basis of Finisar stock, inflating the outside basis
in the lower tier partnership would be achieved by entering
into a short sale of Treasury notes. The proceeds of the short
sale (along with the obligation to close the short sale) would
be transferred to the lower tier partnership. The tiered part-
nership structure itself would be effected by a purported cap-
ital contribution of substantially all of the partnership
interests in the lower tier partnership to the upper tier part-
nership. Following this capital contribution, the upper tier
partnership would hold, as assets, almost all of the partner-
ship interests in the lower tier partnership. The upper tier
partnership would claim, under authority of section 723, that
its basis in these assets is the same as the inflated outside
basis in the lower tier partnership at the time of the capital
contribution.
As discussed below, Mr. Rawls ended up executing the
tiered partnership strategy twice; once during March and
April 2000, and then again during August and September
2000. A different lower tier partnership was involved each
time. However, Mr. Rawls used the same upper tier partner-
ship on both occasions.
For purposes of resolving the jurisdictional question at
hand, the proper tax characterization of each step of every
transaction at issue is not necessarily critical. Instead, what
matters is whether the lower tier partnerships were indeed
the source of the asserted overstatement of their respective
outside bases and whether the upper tier partnership was
merely a conduit. Consequently, we omit, for now, many of
the exact details of these extremely elaborate transactions
and provide only a cursory overview, finding only such facts
as bear upon the inquiry into whether we have jurisdiction
over the interim partnership proceeding.
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278 138 UNITED STATES TAX COURT REPORTS (271)
A. The Group Transactions
The tiered partnership strategy was first implemented
with a series of transactions that took place between March
28 and April 10, 2000, in roughly the order in which they are
described below.
Mr. Rawls formed four entities: the Jerry S. Rawls
Management Corp. (JSRMC); Rawls Management Corp. (RMC);
the Jerry S. Rawls Business Trust (ESBT); and the Jerry S.
Rawls Family Trust (Family Trust). 12 Mr. Rawls was the
sole shareholder, president, and director of JSRMC and RMC
and the grantor, trustee, and beneficiary of ESBT. Mr. Rawls
contributed 1,060,000 shares of Finisar stock to ESBT. Mr.
Rawls and his brother, Warren Rawls, were the grantor and
trustee, respectively, of Family Trust. Family Trust’s bene-
ficiaries are the descendants of Mr. Rawls’ parents, with the
exception of Mr. Rawls.
ESBT and RMC formed Family, which would serve as the
upper tier partnership. Mr. Rawls, as trustee of ESBT, was a
99.99% limited partner in Family, and RMC was a 0.01% gen-
eral partner, and the sole general partner, of Family. Mr.
Rawls contributed his interest in RMC to ESBT. ESBT contrib-
uted the 1,060,000 shares of Finisar to Family.
ESBT, through a brokerage account at Paine Webber, sold
short Treasury notes with a face value of $200 million,
receiving $201,326,876 in proceeds. JSRMC and ESBT formed
Group, which would serve as the lower tier partnership. ESBT
received a 99.99% limited partnership interest in Group in
exchange for a contribution of the proceeds of the short sale
and the obligation to close the short sale.
On its Form 1065, U.S. Return of Partnership Income
(partnership return), for the short tax year beginning April
2 and ending April 6, 2000, filed February 18, 2001, Group
accounted for the short sale proceeds as ESBT’s capital con-
tribution. Group did not account for the obligation to close
the short sale as a partnership liability under section 752(a)
and (b). Thus, ESBT presumably received an inflated outside
12 JSRMC and RMC each filed a Form 2553, Election by a Small Business Corporation. Re-
spondent issued notices of acceptance as S corporations to JSRMC and RMC. Mr. Rawls filed
an election for ESBT to be a small business trust under sec. 1361(e)(3). Respondent claims that
Heritage employed an electing small business trust in its strategies to avoid having a claimed
loss appear on an individual customer’s tax return. According to respondent, this minimized the
likelihood that the claimed loss would be detected and challenged.
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 279
basis in Group. JSRMC received a 0.01% general partnership
interest in Group in exchange for a nominal contribution and
became the sole general partner of Group.
ESBT then contributed its partnership interest in Group to
Family. Family, presumably under authority of section 723,
inherited ESBT’s inflated outside basis. The ownership struc-
ture at this stage is set forth in the diagram below.
JSRMC and Family then sold their respective partnership
interests in Group to Family Trust. 13 Following this sale, all
ownership interests in Group were held by Family Trust.
Group, now presumably a ‘‘single member disregarded
entity’’, 14 continued to remain liable for the obligation to
close the short sale.
On its partnership return for the short tax year beginning
March 29 and ending December 31, 2000, filed October 16,
13 Mr.
Rawls subsequently sold his interest in JSRMC to Heritage.
14 See
secs. 301.7701–1(a)(4) (providing that ‘‘certain organizations that have a single owner
can choose to be recognized or disregarded as entities separate from their owners’’), 301.7701–
3(b)(1)(ii) (providing that a domestic entity is ‘‘[d]isregarded as an entity separate from its owner
if it has a single owner.’’), Proced. & Admin. Regs.
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280 138 UNITED STATES TAX COURT REPORTS (271)
2001, Family claimed a loss of $202,418,954 on the sale of its
partnership interest in Group to Family Trust. Almost the
entire amount of this loss was the result of the overstate-
ment of Family’s basis in its partnership interest in Group.
This overstatement, in turn, arose from Group’s failure to
account for the obligation to close the short sale.
Family sold 635,297 of the 1,060,000 shares of Finisar
stock that had been previously contributed to it in a sec-
ondary offering, generating net proceeds of $61,052,041.70
after a 3.9% commission. Family Trust then closed the short
sale of the Treasury notes.
Lewis Rice prepared all the documents in connection with
the Group transactions. However, Lewis Rice refused to issue
a ‘‘more-likely-than-not’’ opinion letter for the desired tax
consequences. Lewis Rice believed that there was a greater-
than-50% likelihood that the short-term loss claimed by
Family on the sale of its partnership interest in Group would
be disallowed under section 267. Specifically, the concern
appears to have been that Family and Family Trust would
be deemed ‘‘related’’ within the meaning of section 267.
After discussions between Mr. Rawls and representatives
from Heritage and Lewis Rice, it was decided to undertake
a second set of transactions during August and September
2000. These transactions replicated the Group transactions
described above in a new lower tier partnership. 15 To avoid
section 267 concerns, it was arranged that the partnership
interests in this new lower tier partnership would be sold to
a ‘‘bona fide’’ third party—an entity organized by Heritage
specifically for this purpose.
B. The Trading Transactions
The transaction with a new lower tier partnership took
place in roughly the order in which they are described below.
ESBT began by contributing 5,461,679 shares of Finisar stock,
previously transferred from Mr. Rawls, to Family. 16 ESBT,
through a brokerage account at Donaldson, Lufkin & Jen-
rette, sold short Treasury notes with a face value of $200
15 Also, RMC was used as the 0.01% general partner of the new lower tier partnership. Mr.
Rawls had previously sold his interest in JSRMC to Heritage, as part of the Group transactions.
See supra note 13.
16 The number of contributed Finisar shares represented a 3-for-1 stock split that had taken
effect after the Group transactions had been completed.
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 281
million, receiving $200,449,728 in proceeds. ESBT and RMC
formed Rawls Trading, L.P. (Trading), which would serve as
the new lower tier partnership. ESBT received a 99.99% lim-
ited partnership interest in Trading in exchange for a con-
tribution of the proceeds of the short sale and the obligation
to close the short sale.
On its partnership return for the short tax year beginning
August 17 and ending September 7, 2000, filed July 17, 2001,
Trading accounted for the short sale proceeds as ESBT’s cap-
ital contribution. Trading did not account for the obligation
to close the short sale as a partnership liability under section
752(a) and (b). Thus, ESBT presumably received an inflated
outside basis in Trading. RMC received a 0.01% general part-
nership interest in Trading in exchange for a nominal con-
tribution and became the sole general partner of Trading.
ESBT then contributed its partnership interest in Trading
to Family. Family, presumably under authority of section
723, inherited ESBT’s inflated outside basis. The ownership
structure at this stage is set forth in the diagram below.
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282 138 UNITED STATES TAX COURT REPORTS (271)
RMC and Family sold their respective partnership interests
in Trading to the West Coast Business Trust (West Coast).
West Coast’s sole trustee was Gary M. Kornman, a ‘‘key’’
principal at Heritage, and the individual who ostensibly con-
trolled Heritage. West Coast was evidently set up for the sole
purpose of accommodating the sale of partnership interests
in Trading. Following this sale, all ownership interests in
Trading were held by West Coast. Trading, now presumably
a ‘‘single member disregarded entity’’, 17 continued to remain
liable for the obligation to close the short sale.
On its partnership return, Family claimed a loss of
$201,951,603 on the sale of its partnership interest in
Trading to West Coast. Almost the entire amount of this loss
was the result of the overstatement of Family’s basis in its
partnership interest in Trading. This overstatement, in turn,
arose from Trading’s failure to account for the obligation to
close the short sale. West Coast presumably closed the short
sale of the Treasury notes.
It is readily apparent from the foregoing description of the
Group and Trading transactions that Group and Trading
were, in fact, the source partnerships in which the overstate-
ment of bases was engineered. By comparison, Family was
the partnership that merely transmitted the consequences of
these overstated bases to Mr. Rawls through other pass-
through entities, viz, ESBT, RMC, and JSRMC. As mentioned
below, respondent admits as much, and in so many words. 18
Consequently, each of Group and Trading is properly
characterized as a source partnership, while Family is prop-
erly designated an interim partnership.
III. Reporting the Transactions
On October 16, 2000, Lewis Rice issued a written tax
opinion to Mr. Rawls supporting the short-term capital loss
claimed on Family’s partnership return on account of the
Trading transactions. Mr. Rawls hired Larry Poster, a cer-
tified public accountant, to prepare the tax returns for ESBT,
Family Trust, Family, Group, and Trading. Mr. Poster was
referred to Mr. Rawls by Heritage. Mr. Poster had previously
worked on at least one other transaction with a Heritage
17 See supra note 14 (citing the applicable regulations defining a ‘‘single member disregarded
entity’’).
18 See infra note 19 and accompanying text.
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client, but had never previously received referral fees from or
had a fee arrangement with Heritage. Mr. Poster character-
ized the Rawls transaction as involving the ‘‘generation of
losses to offset other gains’’.
Mr. Poster reviewed and agreed with the Lewis Rice
opinion. He advised Mr. Rawls that the short sale obligation
was not a liability for purposes of section 752. He also
advised Mr. Rawls that it was appropriate to report the
Group losses on the Family return. Mr. Poster felt it was
proper to report the losses from both transactions despite the
lack of an opinion letter for the April transaction. Mr. Poster
charged Mr. Rawls $3,000 to $5,000 per return prepared.
As of the date of trial Mr. Rawls continued to control
Family. At that time Family’s assets included shares of stock
in Finisar and other companies, bonds, and private equity,
mutual fund, and hedge fund holdings exceeding $67 million
in value. Also, as of the date of trial Mr. Poster continued to
prepare tax returns for Mr. Rawls and entities that he
owned.
As mentioned above, the Family, Group, and Trading part-
nership returns were filed on October 16, February 18, and
July 17, 2001, respectively.
IV. Issuance of the FPAAs
On March 9, 2007, respondent timely mailed to the respec-
tive TMPs of Trading, Group, and Family FPAAs of the part-
nership items of Trading for the short tax year ending Sep-
tember 7, 2000 (Trading FPAA), Group for the short tax year
ending April 6, 2000 (Group FPAA), and Family for the tax
year 2000 (Family FPAA). On June 6, 2007, Trading’s TMP,
RMC, timely filed a petition for redetermination of the part-
nership items of Trading as set forth in the Trading FPAA. On
June 6, 2007, RMC filed a timely petition under section
6226(a) for redetermination of the partnership items of
Family as set forth in the Family FPAA. On July 2, 2007, a
petition for redetermination of the partnership items of
Group as set forth in the Group FPAA was filed.
On September 24, 2008, respondent filed a motion to stay
the partner-level proceedings initiated in response to the
Family FPAA. We denied respondent’s motion without preju-
dice in an order of January 27, 2009. Respondent now raises
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284 138 UNITED STATES TAX COURT REPORTS (271)
the issue for the second time on brief and adopts the same
arguments contained in his motion.
OPINION
I. We Are Obliged To Determine Whether We Have Jurisdic-
tion.
Neither party has questioned our jurisdiction over the
Family case or disputed the validity of the Family FPAA.
Respondent insists that the Family FPAA is valid and merely
asks us to stay the Family case until the resolution of the
Group and Trading cases. See motion to stay 1–2 (‘‘Having
issued a valid, but partially premature, FPAA to Family’s
partners for 2000, respondent requests the case be stayed
pending the outcome of the related source partnership pro-
ceedings.’’ (Emphasis supplied.)). Petitioners object to a stay
and wish for a concurrent resolution of all three consolidated
cases.
Regardless of the parties’ seeming acquiescence on the
validity of the Family FPAA, we are under an affirmative duty
to investigate the extent of our subject matter jurisdiction.
See, e.g., Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)
(underlining that courts ‘‘have an independent obligation to
determine whether subject-matter jurisdiction exists, even in
the absence of a challenge from any party’’); United States v.
Cotton, 535 U.S. 625, 630 (2002) (holding that ‘‘subject-
matter jurisdiction, because it involves a court’s power to
hear a case, can never be forfeited or waived’’).
We are a court of limited jurisdiction, and our jurisdiction
is both granted and circumscribed by statute. See sec. 7442
(‘‘The Tax Court and its divisions shall have such jurisdiction
as is conferred on them by this title’’); see also Pyo v.
Commissioner, 83 T.C. 626, 632 (1984) (‘‘This Court is a court
of limited authority and may exercise jurisdiction only to the
extent expressly provided by Congress.’’). Section 6226(a)
confers jurisdiction on us over a timely filed ‘‘petition for a
readjustment of the partnership items’’ that the Commis-
sioner had previously adjusted pursuant to a valid FPAA. Sec-
tion 6223 requires the Commissioner to ‘‘mail to each partner
whose name and address is furnished to * * * [him] notice[s]
of * * * the beginning of an administrative proceeding at the
partnership level with respect to a partnership item, and
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 285
* * * the final partnership administrative adjustment
resulting from any such proceeding.’’
As mentioned above, respondent had mailed the Family
FPAA on March 9, 2007, and in response RMC had timely peti-
tioned the Court on June 6, 2007. Prima facie, we would
appear to have jurisdiction to readjust the items that
respondent had adjusted in the Family FPAA. This presumes,
however, that none of the adjustments shown on the Family
FPAA constitutes a ‘‘computational adjustment’’ within the
meaning of section 6231(a)(6). If, however, the Family FPAA
merely reflects computational adjustments, then, as we show
below, the issuance of this FPAA before the conclusion of the
partnership-level proceedings for Group and Trading would
render the FPAA ineffective for conferring jurisdiction upon
us.
II. Adjustments on the Family FPAA Are Computational
Adjustments.
Section 6231(a)(6) defines computational adjustment as
‘‘the change in the tax liability of a partner which properly
reflects the treatment * * * of a partnership item.’’ It adds
that ‘‘All adjustments required to apply the results of a pro-
ceeding with respect to a partnership * * * to an indirect
partner shall be treated as computational adjustments.’’
Section 6231(a)(10) defines an indirect partner as ‘‘a person
holding an interest in a partnership through 1 or more pass-
thru partners.’’ A ‘‘pass-thru’’ partner, in turn, is defined by
section 6231(a)(9) as ‘‘a partnership * * * or other similar
person through whom other persons hold an interest in the
partnership with respect to which proceedings under this
subchapter are conducted.’’
Mr. Rawls was an indirect partner in each of Group and
Trading because he held interests in both these entities
through Family and other ‘‘pass-thru partner[s]’’ within the
meaning of section 6231(a)(9). Therefore, to the extent the
Family FPAA was merely seeking to apply to Mr. Rawls’ indi-
vidual tax liability the results of the adjustments shown on
the Group FPAA and Trading FPAA, pursuant to section
6231(a)(6), the Family FPAA was only making computational
adjustments.
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286 138 UNITED STATES TAX COURT REPORTS (271)
Respondent admits that all adjustments shown on the
Family FPAA reflect the consequences of corresponding
adjustments shown on the Group FPAA and Trading FPAA. 19
Thus, to the extent the Family FPAA made any adjustments,
all such adjustments were computational adjustments within
the meaning of section 6231(a)(6).
Computational adjustments are not subject to the full pan-
oply of restrictions on assessments that apply to an ‘‘assess-
ment of a deficiency attributable to any partnership item’’
under section 6225. By way of example, which is not the case
here, under section 6222(c), in the event of ‘‘any computa-
tional adjustment required to make the treatment of the
items by * * * [a] partner consistent with the treatment of
the items on the partnership return’’, the Commissioner may
dispense with an FPAA and proceed to make a direct assess-
ment of the computational adjustment. If the Commissioner
‘‘erroneously computed any [such] computational adjust-
ment’’, under section 6230(c)(1)(A)(i) the partner is not
eligible for a prepayment remedy but instead must pay the
tax and file a claim for refund.
Another example, which also does not apply here, is pre-
sented by section 6230(c)(1)(A)(ii). As set forth in that sec-
tion, if the Commissioner ‘‘erroneously computed any com-
putational adjustment necessary * * * to apply to the
partner a settlement, * * * [an FPAA], or the decision of a
court in an action’’ relating to the readjustment of partner-
ship items, then the partner is restricted to a refund forum
and may not litigate in deficiency mode. In other words, the
partner has to first pay the tax and then file a claim for
refund. See sec. 6230(c)(2).
III. Is the Family FPAA Valid?
A. TEFRA Segregates Partnership and Nonpartnership
Items.
TEFRA’s design is premised on the conceptual dichotomy of
partnership and nonpartnership items. And TEFRA’s proce-
dures require ‘‘administrative and judicial resolution of dis-
19 The other items shown on the Family FPAA make no change or ‘‘adjustment’’ to Family’s
return. See motion to stay 11 (‘‘The Family FPAA, but for its prematurity vis-a-vis the source
partnership proceedings, is otherwise a valid no change FPAA, in that it addresses items re-
ported on the Family return that respondent determined were correctly reported.’’).
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 287
putes involving partnership items to be separate from and
independent of disputes involving non-partnership items.’’
Maxwell v. Commissioner, 87 T.C. 783, 788 (1986) (citing H.
Rept. 97–760, at 611 (1982) and section 6226(a) and (f)).
The terms ‘‘partnership item’’ and ‘‘nonpartnership item’’
are defined in section 6231(a)(3) and (4), respectively, as fol-
lows:
The term ‘‘partnership item’’ means, with respect to a partnership, any
item required to be taken into account for the partnership’s taxable year
under any provision of subtitle A to the extent regulations prescribed by
the Secretary provide that, for purposes of this subtitle, such item is more
appropriately determined at the partnership level than at the partner
level.
* * * The term ‘‘nonpartnership item’’ means an item which is (or is
treated as) not a partnership item.
B. Computational Adjustments Represent Deficiency Con-
sequences.
By comparison, and as mentioned above, pursuant to sec-
tion 6231(a)(6), ‘‘The term ‘computational adjustment’ means
the change in the tax liability of a partner which properly
reflects the treatment under this subchapter of a partnership
item.’’ Thus, a computational adjustment is the consequence
to the partner of a determination, whether administrative or
judicial, regarding ‘‘the treatment under this subchapter of a
partnership item.’’
Also instructive in this context is section 6230(a)(1), which
governs the application of ‘‘subchapter B of this chapter
* * * to the assessment or collection of any computational
adjustment.’’ (Emphasis supplied.) ‘‘Subchapter B of this
chapter’’ refers to the deficiency procedures set forth in sec-
tions 6211 through 6216. Thus, it is readily apparent from
the language of section 6230(a)(1) quoted above that com-
putational adjustments are viewed as representing the ‘‘defi-
ciency impact’’ of the proper tax treatment of the underlying
partnership items. This partner-level deficiency consequence
may directly flow from an adjustment of a partnership item.
Alternatively, it may arise from an item affected by an
adjustment of a partnership item, a so-called affected item
under section 6231(a)(5).
Where the computational adjustment flows from affected
items, which themselves require partner-level determina-
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288 138 UNITED STATES TAX COURT REPORTS (271)
tions, then section 6230(a)(2) affords the partner a prepay-
ment forum to challenge the Commissioner’s partner-level
determinations and his resulting computational adjustment.
In the absence of any affected items requiring partner-level
determinations, the partner cannot dispute the Commis-
sioner’s computational adjustment in deficiency mode.
Instead, the Commissioner can make a direct assessment,
and the partner’s remedy is limited to a claim or suit for
refund. See sec. 6230(a)(1), (c)(4).
C. Deficiency Consequences Must Await Completion of
Source Partnership Proceedings.
Because a computational adjustment follows an adminis-
trative or judicial resolution of the treatment of one or more
partnership items, it stands to reason that a computational
adjustment itself cannot be the subject of partnership-level
proceedings. In GAF Corp. & Subs. v. Commissioner, 114
T.C. 519, 525 (2000), we had followed Maxwell and its
progeny to conclude that we lack jurisdiction to redetermine
the effects of the Commissioner’s partnership-level adjust-
ments ‘‘prior to completion of the TEFRA partnership proce-
dures’’. We had characterized any notice that the Commis-
sioner may issue in the intervening period as ‘‘ineffectual’’
and held it to be invalid. Though GAF Corp. & Subs. and the
Maxwell line of cases dealt with notices of deficiency issued
to partner-taxpayers, their logic applies with equal force to
an FPAA issued to an interim partnership that purports to
make only computational adjustments.
In GAF Corp. & Subs. we had construed section 6225(a) as
foreclosing the Commissioner from initiating a partner-level
action before the underlying partnership-level proceeding has
come to a close. We had reasoned that the Commissioner
‘‘ ‘has no authority to assess a deficiency attributable to a
partnership item until after the close of a partnership pro-
ceeding.’ ’’ GAF Corp. & Subs. v. Commissioner, 114 T.C. at
526 (quoting Dubin v. Commissioner, 99 T.C. 325, 328
(1992)).
As mentioned above, we must consider adjustments shown
on the Family FPAA as representing the deficiency impact of
the adjustments made to the partnership items of the source
partnerships. The reasoning advanced in GAF Corp. & Subs.
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 289
would imply that adjudicating adjustments shown on the
Family FPAA must await culmination of the two source part-
nership-level proceedings.
Not just the intrinsic rationale but also the explicit holding
of GAF Corp. & Subs. precludes respondent from issuing an
FPAA to Family, which shows nothing more than computa-
tional adjustments, before the completion of the partnership-
level proceedings for the source partnerships. Each item
adjusted by the Family FPAA is an ‘‘affected item’’ within the
meaning of section 6231(a)(5). As discussed above, adjust-
ments shown on the Family FPAA simply translate, in tax
liability terms, the adjustments made to the partnership
items of Group and Trading. Thus, any item adjusted pursu-
ant to the Family FPAA ‘‘is affected by a partnership item’’,
viz, the underlying partnership item belonging to either
Group or Trading. This partnership item, in turn, would
have been adjusted pursuant to the respective source FPAA.
We held in GAF Corp. & Subs. v. Commissioner, 114 T.C.
at 526 (quoting Dubin v. Commissioner, 99 T.C. at 328), that
‘‘ ‘since the tax treatment of affected items depends on part-
nership level determinations, affected items cannot be tried
* * * until the completion of the partnership level pro-
ceeding.’ ’’ It would follow that the affected items that
respondent seeks to adjust by the Family FPAA ‘‘cannot be
tried * * * until the completion of the [respective source]
partnership level proceeding.’’
D. We Lack Jurisdiction Over the Family Case.
For the same reasons that we had advanced in GAF Corp.
& Subs., we hold here that an FPAA issued to an interim
partnership showing nothing more than computational
adjustments is invalid and does not confer jurisdiction on us.
As outlined above, the Commissioner proceeds against a
partner-taxpayer after a TEFRA partnership-level proceeding
by first making a computational adjustment. See secs. 6230,
6231(a)(6). If the computational adjustment does not involve
affected items requiring partner-level determinations, then
the Commissioner may directly assess the amount of the
computational adjustment. See sec. 6230(a)(1). If, however,
any partner-level determinations are required, then the
Commissioner must issue a so-called affected items notice of
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290 138 UNITED STATES TAX COURT REPORTS (271)
deficiency to the partner-taxpayer. See sec. 6230(a)(2). GAF
Corp. & Subs. has interpreted section 6225(a) to preclude the
Commissioner from issuing this notice before the partner-
ship-level proceeding has come to a close. And the plain lan-
guage of section 6225(a) prohibits an ‘‘assessment of a defi-
ciency attributable to any partnership item’’ before a partner-
ship-level decision becomes final.
Thus, whether or not partner-level determinations are
required, the Commissioner must wait for the completion of
the partnership-level proceedings before he can commence
assessing a computational adjustment against the partner-
taxpayer. Any notice that the Commissioner may issue before
that time that purports to make a computational adjustment,
whether in the guise of an FPAA or otherwise, is therefore
ineffective for conferring jurisdiction on us. Respondent
acknowledges that the Family FPAA makes only those adjust-
ments that section 6231(a)(6) terms ‘‘computational adjust-
ments’’. We conclude that this FPAA, which seeks to give
effect to the adjustments shown in the Group FPAA and the
Trading FPAA, is invalid because it was issued before the
partnership-level proceedings in the Group case and the
Trading case were completed.
IV. Lack of Subject Matter Jurisdiction Prevents a Stay.
Respondent asserts that the Family FPAA is otherwise valid
but merely premature. See motion to stay 8–9 (‘‘Respondent
requests that the Court stay this case rather than dismiss
the determinations of the Family Affected Items under the
holding in GAF v. Commissioner’’.). We cannot stay the pro-
ceeding in a case over which we lack subject matter jurisdic-
tion. As the Supreme Court explained in Arbaugh v. Y & H
Corp., 546 U.S. at 514, ‘‘when a federal court concludes that
it lacks subject matter jurisdiction, the court must dismiss
the complaint in its entirety.’’ Cf. Thompson v. Commis-
sioner, 137 T.C. 220, 224–226 (2011) (holding ‘‘[v]oid [a]b
[i]nitio * * * an affected items notice of deficiency * * *
[issued] in the absence of a need for partner-level determina-
tions’’).
Further, in respondent’s request to stay, rather than dis-
miss, the proceeding in the Family case, we detect echoes of
the dissent’s reasoning in GAF Corp. & Subs. v. Commis-
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 291
sioner, 114 T.C. at 531 (Halpern, J., dissenting) (‘‘A reason-
able interpretation of the statute does not require that we
dismiss this type of case for lack of jurisdiction, only that, if
necessary, we defer proceeding until consideration of the
affected items is appropriate.’’). The dissent’s statutory
interpretation was not adopted by the Court’s majority in
GAF Corp. & Subs. and stare decisis prevents us from revis-
iting that argument here.
We are cognizant of respondent’s concern that the ‘‘no-
second-FPAA’’ rule of section 6223(f) may be deployed as a
shield to seek immunity for Family from another round of
partnership-level proceedings. In particular, respondent wor-
ries that if we hold invalid the Family FPAA, then ‘‘the ability
to issue a second notice under 6230(a)(2)(C) is not available.’’
Motion to stay 10. Section 6230(a)(2)(C) carves out exceptions
from the ‘‘no-second-deficiency notice’’ rule of section 6212(c),
but only for affected items notices of deficiency issued under
6230(a)(2)(B). Section 6230(a)(2)(C) says nothing about the
Commissioner’s ability to issue another FPAA to a partnership
if the first FPAA has been held invalid.
Respondent notes that ‘‘Family is itself subject to the
TEFRA partnership rules requiring the issuance of a notice of
final partnership administrative adjustment to Family’s part-
ners under section 6223(f) [sic] rather than a notice of defi-
ciency under section 6212.’’ Motion to stay 10. We assume
that, instead of citing section 6223(f), respondent intended to
refer to section 6223(a), which requires the Secretary to
‘‘mail to each partner whose name and address is furnished
to the Secretary notice of * * * the beginning of an adminis-
trative proceeding at the partnership level with respect to a
partnership item, and * * * the final partnership adminis-
trative adjustment resulting from any such proceeding [i.e.,
an FPAA].’’
Respondent argues against applying GAF Corp. & Subs.
and invalidating the Family FPAA because ‘‘section 6223(f)
would prohibit respondent from issuing a second FPAA to
Family after the completion of the source partnership pro-
ceedings.’’ Motion to stay 10. Respondent depicts the fol-
lowing ‘‘doomsday scenario’’ if we were to dismiss the Family
case for lack of jurisdiction: ‘‘Respondent would be forever
barred from having an opportunity to disallow Family’s
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292 138 UNITED STATES TAX COURT REPORTS (271)
claimed flow-through losses from the source partnerships.’’
Id.Assume arguendo that respondent in his motion to stay is
entirely accurate in his assertion about the need for an FPAA
to Family, and completely prophetic in his prediction
regarding the impact of our dismissing the Family case for
lack of jurisdiction. Nevertheless, we still would not be per-
suaded to exercise jurisdiction over the Family case.
As noted above, our jurisdiction is conferred by statute.
Specifically, we were established ‘‘under article I of the Con-
stitution of the United States’’. Sec. 7441. Although an
Article I creation, ‘‘the [Tax] [C]ourt exercises a portion of the
judicial power of the United States’’. Freytag v. Commis-
sioner, 501 U.S. 868, 891 (1991). However, we cannot exer-
cise jurisdiction that Congress has not explicitly granted us.
See also Commissioner v. Gooch Milling & Elevator Co., 320
U.S. 418, 422 (1943) (‘‘The Internal Revenue Code, not gen-
eral equitable principles, is the mainspring of the * * * [Tax
Court’s] jurisdiction.’’). Compare sec. 7442 (‘‘The Tax Court
and its divisions shall have such jurisdiction as is conferred
on them by this title’’) with U.S. Const., article III, sec. 2, cl.
1 (‘‘Jurisdiction of [Article III] Courts * * * shall extend to
all Cases, in Law and Equity, arising under this Constitu-
tion’’ (emphasis supplied)).
Unlike an Article III court, ‘‘the Tax Court, being a court
of limited jurisdiction, * * * [does] not have equitable power
to expand its jurisdiction’’. Buchine v. Commissioner, 20 F.3d
173, 178 (5th Cir. 1994) (citing Continental Equities, Inc. v.
Commissioner, 551 F.2d 74, 79 (5th Cir. 1977)). Thus, in
determining the outer limits of the ambit of our subject
matter jurisdiction, we cannot consider the consequences,
howsoever harsh they may be, that our decision inflicts upon
one of the parties. In particular, we do not ‘‘possess[ ] general
equity jurisdiction’’, Gooch Milling & Elevator Co., 320 U.S.
at 421, that could be exercised to prevent or undo an inequi-
table outcome, see also Commissioner v. McCoy, 484 U.S. 3,
7 (1987) (‘‘The Tax Court is a court of limited jurisdiction and
lacks general equitable powers.’’).
But the inequitable outcome that respondent fears and
foretells may not be inevitable. There are good reasons to
believe that respondent is being unduly pessimistic in
prognosticating the effects of our invalidating the Family
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(271) RAWLS TRADING, L.P. v. COMMISSIONER 293
FPAA. 20 The gloom and doom in respondent’s motion to stay
seem to us to be unwarranted.
Strictly speaking, it lies beyond the scope of our inquiry
here to consider and opine on whether, following our decision
to invalidate the Family FPAA before us and dismiss the
Family case for lack of jurisdiction, respondent may be able
to proceed against Family without issuing another FPAA. 21
We point out, however, that crucial to our conclusion that we
lack jurisdiction over the Family case is the provision in sec-
tion 6231(a)(6) that ‘‘All adjustments required to apply the
results of a proceeding with respect to a partnership * * *
to an indirect partner shall be treated as computational
adjustments.’’ While this sentence serves to deprive us of
jurisdiction over the Family case, it may also indicate a path
that respondent can traverse that does not require another
Family FPAA.
To the extent the first Family FPAA, which we are invali-
dating here, represented a computational adjustment,
respondent should be able to proceed against the indirect
partner, Mr. Rawls, without a Family FPAA. If, after the part-
nership-level proceedings in the Group and Trading cases are
completed, no partner-level determinations are required,
then respondent should be able to make a direct assessment
of the computational adjustment. If, on the other hand,
partner-level determinations are required, then respondent
should be able to follow the ‘‘affected items’’ deficiency proce-
dures of section 6230(a)(2). Further, the partner-level deter-
minations specified in section 6230(a)(2) may encompass both
direct and indirect partners.
The definition of ‘‘partner’’ in section 6231(a)(2) includes
not just a ‘‘partner in the partnership’’, but also ‘‘any other
person whose income tax liability * * * is determined in
20 The motion to stay seems at variance with the Commissioner’s other communications ad-
dressing the need for an FPAA to proceed against an upper tier partnership. In fact, the Com-
missioner’s thinking on this matter appears to be in flux. Compare CCA 201020017 (May 21,
2010) (suggesting, for a tiered partnership structure, that ‘‘if the [challenged] deduction is an
affected item requiring partner level determinations we may have to issue an affected item no-
tice to disallow the deduction as an affected item. Since the partner is itself a TEFRA partner-
ship, we may have to issue an affected item FPAA at that level to make this determination’’
(emphasis supplied)) with CCA 200907033 (Feb. 23, 2009) (declaring that ‘‘We don’t issue FPAAs
to [upper] tier partnerships if the adjustment originates in another ‘source’ partnership. We only
issue an FPAA for the source partnership to all of its partners (including its partnership part-
ners).’’).
21 Such an FPAA to Family would presumably represent the ‘‘affected items FPAA’’ referred
to in CCA 201020017. See supra note 20.
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294 138 UNITED STATES TAX COURT REPORTS (271)
whole or part by taking into account directly or indirectly
partnership items of the partnership.’’ (Emphasis supplied.)
There is no reason a single ‘‘affected items’’ deficiency pro-
ceeding under section 6230(a)(2) should not suffice to make
any factual determinations required to give effect to the
findings and holdings of the Group and Trading cases.
V. Source Partnership Proceedings Stand Alone.
Finally, we observe that our conclusion here is perfectly
congruent with our holding in Sente Inv. Club P’ship of Utah
v. Commissioner, 95 T.C. 243 (1990), that a proceeding
involving a pass-thru interim partner cannot affect the treat-
ment of items originating with lower tier source partner-
ships. We held there that the treatment of items in source
partnerships must be determined in separate proceedings
involving those partnerships. In doing so, we noted that ‘‘the
notice provisions [of TEFRA] with respect to indirect partners
are calculated to permit them an opportunity to participate
in the only proceeding in which adjustments to the return of
the partnership in which they hold an indirect interest may
be contested.’’ Id. at 249 (emphasis supplied).
It follows that the only proceedings in which adjustments
to the returns of the source partnerships, in which Mr. Rawls
holds an indirect interest, may be contested are the Group
and Trading cases. The Family FPAA is invalid, and we lack
jurisdiction over the Family case.
The Court has considered all of petitioners’ and respond-
ent’s contentions, arguments, requests, and statements. To
the extent not discussed herein, we conclude that they are
meritless, moot, or irrelevant.
To reflect the foregoing,
An order of dismissal for lack of jurisdic-
tion will be entered in docket No. 12938–07.
f
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