Tax Court upholds timeliness of 2018 affected-items notices to Tom Gonzales
Gonzales v. Commissioner, T.C. Memo. 2025-103, No. 3361-19., 2025 BL 361489, Court Opinion
On October 8, 2025, the U.S. Tax Court granted the IRS’s motion for partial summary judgment in Gonzales v. Commissioner, holding that three November 16, 2018 affected-items notices of deficiency for 2000, 2001, and 2003 were timely.
The court found the limitations issue already resolved at the partnership level and, in any event, precluded by collateral estoppel. An appropriate order will be issued.
Why It Matters
The ruling confirms that statute-of-limitations defenses tied to TEFRA partnership items must be raised and resolved in the partnership case, and once decided, they bind partner-level proceedings.
It also clarifies that the one-year suspension under section 6229(d) runs from the date the partnership case becomes final, not from an earlier, related individual deficiency case.
Key Facts
Parties: Tom Gonzales (petitioner) vs. Commissioner of Internal Revenue (respondent).
Issue decided: Whether the IRS mailed 2018 affected-items notices within the assessment period under sections 6501 and 6229.
Structure: Gonzales invested through Birch Ventures, LLC, which formed Logan, a strategic investment fund used in a Son-of-BOSS transaction in 2000; Logan dissolved in June 2000.
Returns: Logan filed a 2000 partnership return; Gonzales filed individual returns for 2000, 2001, and 2003.
Consents: The IRS obtained partnership-level consents (Forms 872-P) signed by the TMP’s representative and individual consents (Forms 872-I) signed by Gonzales.
FPAA: Issued to Logan on April 28, 2005.
Partnership litigation: TMP filed a consolidated partnership case; Gonzales intervened to raise the limitations defense.
Holdings in partnership case: District court upheld timeliness and validity of the consents; Ninth Circuit affirmed; Supreme Court denied certiorari on February 20, 2018.
Affected-items notices: Mailed to Gonzales on November 16, 2018 for 2000, 2001, and 2003.
Timeline
January–June 2000: Birch forms Logan; Logan dissolves June 14, 2000.
April 16, 2001: Logan files 2000 Form 1065.
Dec. 1, 2003 / Feb. 2, 2004: IRS obtains Forms 872-P extending Logan’s 2000 partnership limitations period.
Dec. 2, 2003 / Oct. 20, 2004: Gonzales signs Forms 872-I extending his 2000 partner-level limitations period.
Apr. 14, 2005: IRS issues 2000–2001 individual deficiency notices; Gonzales petitions (Gonzales I).
Apr. 28, 2005: IRS issues FPAA to Logan for 2000.
July 12, 2005: TMP files partnership case in N.D. Cal.
Feb. 27, 2008: Tax Court enters stipulated decision in Gonzales I on 2000–2001 deficiencies, reserving partnership items for separate proceeding.
July 31, 2014: District court grants government’s summary judgment on timeliness and sustains FPAA adjustments (with a limited exception).
June 7, 2017: Ninth Circuit affirms on the statute-of-limitations issue.
Feb. 20, 2018: Supreme Court denies certiorari; partnership case becomes final.
Nov. 16, 2018: IRS mails affected-items deficiency notices to Gonzales for 2000, 2001, 2003.
Feb. 12, 2019: Gonzales files the present case; IRS moves for partial summary judgment on timeliness.
Oct. 8, 2025: Tax Court grants IRS motion.
Court Findings
Jurisdictional allocation: Under TEFRA, limitations challenges to the FPAA are partnership items and belong in the partnership proceeding, not the partner-level case.
Issue preclusion: Gonzales is collaterally estopped from relitigating the validity of his Forms 872-I; the identical issue was actually litigated and essential to the partnership judgment, which is final.
Finality date: The partnership proceeding became final on February 20, 2018 when the Supreme Court denied certiorari.
Timeliness of 2018 notices: The November 16, 2018 affected-items notices were mailed within one year after the partnership case became final, satisfying section 6229(d).
Gonzales I not controlling: The 2008 stipulated decision in Gonzales I was an individual deficiency case and expressly deferred Logan-related partnership items to the separate partnership case; it does not set the finality date for section 6229(d).
Judgment Details
Holding: IRS’s motion for partial summary judgment is granted on the limitations issue; the 2018 affected-items notices for 2000, 2001, 2003 are timely.
Statutes applied: Sections 6501(a); 6221; 6231(a)(3), (6), (7); 6226; 6230(a)(1), (2)(A), (2)(C), (g); 6229(a), (b)(1), (b)(3), (d); 6501(c)(4); 7481(a)(2)(B).
Procedural note: The court does not reach accuracy or other merits issues; only timeliness was decided.
Outcome
The court will issue an order granting partial summary judgment for the IRS on timeliness.
The case proceeds, if at all, on remaining non-timeliness issues raised in the 2018 affected-items notices.
The Takeaway
In TEFRA years, once a partnership court resolves a statute-of-limitations issue and the case becomes final, partners cannot relitigate it in a later affected-items case.
The one-year suspension in section 6229(d) runs from the finality of the partnership litigation, making post-finality affected-items notices timely if mailed within that window.
Gonzales v. Commissioner, T.C. Memo. 2025-103, No. 3361-19., 2025 BL 361489, Court OpinionSource: Tax Notes
List of citations
Sundstrand Corp. v. Commissioner, 98 T.C. 518 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994): Cited for the summary judgment standard and viewing facts in favor of the non-movant.
Twenty-Two Strategic Investment Funds v. United States, No. 05-cv-02835 (N.D. Cal. filed July 12, 2005): Referenced as the related partnership-level TEFRA proceeding involving Logan and related SIFs.
Gonzales v. Commissioner (Gonzales I), No. 12982-05 (T.C. Feb. 27, 2008): Prior individual deficiency case reserving partnership items for separate litigation.
Fed. R. Evid. 201; Leyshon v. Commissioner, T.C. Memo. 2015-104, aff’d, 649 F. App’x 299 (4th Cir. 2016): For judicial notice of related proceedings.
Rhone-Poulenc Surfactants & Specialties, L.P. v. Commissioner, 114 T.C. 533 (2000): Explains how section 6229 supplements section 6501 for partnership and affected items.
Rawls Trading, L.P. v. Commissioner, 138 T.C. 271 (2012): Describes the section 6230(a)(2)(C) exception to the no-second-deficiency-notice rule.
Bedrosian v. Commissioner, 143 T.C. 83 (2014), aff’d, 940 F.3d 467 (9th Cir. 2019): Confirms that FPAA limitations defenses are partnership items for partnership-level adjudication.
Kaplan v. United States, 133 F.3d 469 (7th Cir. 1998): Holds that challenges to consents are to be addressed at the partnership level under TEFRA.
Hambrick v. Commissioner, 118 T.C. 348 (2002); Rule 39; Enos v. Commissioner, 123 T.C. 284 (2004); Gustafson v. Commissioner, 97 T.C. 85 (1991); Bonaire Dev. Co. v. Commissioner, 76 T.C. 789 (1981), aff’d, 679 F.2d 159 (9th Cir. 1982): Cited for collateral estoppel principles and pleading affirmative defenses.
Peck v. Commissioner, 90 T.C. 162 (1988), aff’d, 904 F.2d 525 (9th Cir. 1990); Ron Lykins, Inc. v. Commissioner, 133 T.C. 87 (2009): Sets out elements and application of issue preclusion.
Shasta Strategic Inv. Fund, LLC v. United States, No. C-04-04264, 2014 WL 3852416 (N.D. Cal. July 31, 2014); 76 F. Supp. 3d 895 (N.D. Cal. 2014): District court orders upholding the timeliness of the FPAA and sustaining adjustments.
Twenty-Two Strategic Inv. Funds v. United States, 859 F.3d 684 (9th Cir. 2017): Ninth Circuit opinion affirming the validity of Gonzales’s individual consents and rejecting duress/conflict arguments.
Birch Ventures, LLC v. United States, 583 U.S. 1120 (2018): Denial of certiorari establishing finality of the partnership case.
Kligfeld Holdings v. Commissioner, 128 T.C. 192 (2007): Defines Son-of-BOSS transactions.
Internal Revenue Code provisions: Sections 6501(a), 6501(c)(4), 6221, 6226, 6229(a), 6229(b)(1), 6229(b)(3), 6229(d), 6230(a)(1), 6230(a)(2)(A), 6230(a)(2)(C), 6230(g), 6231(a)(3), 6231(a)(6), 6231(a)(7), 7481(a)(2)(B): Cited throughout for TEFRA procedures, limitations, consents, finality, and affected-items rules.