Section of Taxation Publications
  VOL. 54
NO. 1
FALL 2000
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.

Under TEFRA Procedures, Partners Cannot Change Their Election From Litigation to a Consistent Settlement: Prochorenko v. United States

John G. Ha


In Prochorenko v. United States, on cross motions for summary judgment, the Court of Federal Claims addressed the scope of the settlement provision of the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) in determining a potential reduction of partnership tax liability. The court determined that, when a taxpayer’s request for a consistent settlement does not fall within the time frames provided in the Code, the taxpayer will not be entitled to reduced partnership tax liability. The court rejected the taxpayers’ argument that the Service’s settlement with another partner after both the issuance of the Final Partnership Administrative Adjustment (“FPAA”) and the binding outcome of pertinent litigation was a settlement of a partnership item as defined under section 6224(c)(2). Consequently, the court denied the taxpayers’ request for a consistent settlement with the other partner.

Part I of this Note discusses the statutory framework of the TEFRA settlement provisions and the facts of Prochorenko. Part II outlines the arguments for the taxpayers and the government and the Court of Federal Claims’ holding generally. Part III analyzes the court’s conclusion regarding the application of section 6224(c)(2). Finally, Part IV discusses the implications of the court’s holding.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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