Bocilla Island Seaport, Inc., fka Highpoint Tower Technology, Inc. v. Commissioner of Internal Revenue

This Tax Court partner-level penalty jurisdiction case raises these four interrelated issues:

1. Should “each partner’s outside basis [in his partnership interest]... be adjusted at the partner level before the [basis-specific] penalty can be imposed” under the implicated statutes Justice Scalia reconciled in United States v. Woods, 571 U.S. 31, 42 (2013)?

2. Should a partner’s cost basis in Euros (which the partnership proceeding deemed that the partner acquired directly) “be adjusted at the partner level before the [basis] penalty can be imposed”?

3. Does the “plain meaning” of the implicated statutes reverse that sequence (imposition of basis penalty before determination of basis) and require separate additional proceedings, despite the reading of those statutes in Woods, the acknowledged algebraic absurdity, and the overarching legislative purpose of eliminating duplicative proceedings?

4. Where, as here, a separate partner-level Tax Court deficiency proceeding is required to address the impact of partner-level facts on the partner’s basis in the Euros reported solely on the partner’s return, does that jurisdiction permit the partner-level reasonable cause facts that preclude the IRS imposing the partnerlevel, basis-specific penalty?