                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUL 14 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

WEST VENTURES, L.P., FKA Sleiman                No.    19-71134
Ventures, L.P.; ANTHONY T. SLEIMAN,
Tax Matters Partner,                            Tax Ct. No. 24683-10

                Petitioners-Appellants,
                                                MEMORANDUM*
 v.

COMMISSIONER OF INTERNAL
REVENUE,

                Respondent-Appellee.

                           Appeal from a Decision of the
                             United States Tax Court

                             Submitted July 10, 2020**
                               Seattle, Washington

Before: CLIFTON, D.M. FISHER,*** and M. SMITH, Circuit Judges.

      West Ventures, L.P. (West Ventures) appeals the tax court’s order and



      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      ***
            The Honorable D. Michael Fisher, United States Circuit Judge for the
U.S. Court of Appeals for the Third Circuit, sitting by designation.
decision in favor of the Commissioner. West Ventures argues that the tax court

lacked subject matter jurisdiction to sustain the Commissioner’s disallowance of a

$62,370,000 short-term capital loss (Loss) declared in its tax filing (Form 1065)

for the 1999 tax year. We have jurisdiction under 26 U.S.C. § 7482(a).

      The tax court’s rulings on jurisdictional issues are reviewed de novo. See

Gorospe v. Comm’r, 451 F.3d 966, 968 (9th Cir. 2006) (reviewing the tax court’s

dismissal for lack of subject matter jurisdiction de novo); see also Taproot Admin.

Servs., Inc. v. Comm’r, 679 F.3d 1109, 1114 (9th Cir. 2012) (reviewing the tax

court’s grant of summary judgment de novo). Because the Internal Revenue Code,

its associated regulations, and our case law are clear that the Loss was a

partnership item of West Ventures, the final partnership administrative adjustment

(FPAA) was properly issued to West Ventures, the tax court had jurisdiction, and

we affirm.1

      West Ventures’ main argument on appeal is that, in seeking to disallow the

Loss, the Commissioner commenced proceedings against the wrong entity, and



      1
        We recognize that the tax court appears to have concluded that the Loss
was an “affected item” of Sleiman Two. However, “[d]ecisions of the tax court are
reviewed on the same basis as decisions from civil bench trials in the district
court.” MK Hillside Partners v. Comm’r, 826 F.3d 1200, 1203 (9th Cir. 2016)
(quoting DHL Corp. & Subsidiaries v. Comm’r, 285 F.3d 1210, 1216 (9th Cir.
2002). Accordingly, the tax court’s decision may be affirmed on any ground
supported by the record, even if not relied upon by the tax court. See Cassirer v.
Thyssen-Bornemisza Collection Found., 862 F.3d 951, 974 (9th Cir. 2017).

                                          2
thus the tax court lacked jurisdiction. In particular, West Ventures argues that,

according to Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), 26

U.S.C. §§ 6221–6234 (2000), the Commissioner’s FPAA should have been issued

to Sleiman Ventures (Two) LP (Sleiman Two), which is 90% owned by West

Ventures. In statutory terms, West Ventures’ argument is that the Loss is a

“partnership item” of Sleiman Two, not West Ventures. See 26 U.S.C. § 6226(f)

(2000) (the tax court has “jurisdiction to determine all partnership items” of the

partnership to which the FPAA relates).

      Pursuant to TEFRA, a partnership item is one that is “required to be taken

into account for the partnership’s taxable year under any [income tax] provision”

and that “is more appropriately determined at the partnership level than at the

partner level.” 26 U.S.C. § 6231(a)(3) (2000). When identifying a partnership

item, “[t]he ‘critical element’ is that the partnership is required to make the

determination.” Greenwald v. Comm’r, 142 T.C. 308, 313–314 (2014) (quoting 26

C.F.R. § 301.6231(a)(3)-1(c)(1)). “Partnership items, such as a partnership’s

income, gain, loss, deductions, or credits, are items that must be taken into account

on a partner’s federal income tax return and that are determined by the Treasury

Secretary to be ‘more appropriately determined at the partnership level than at the

partner level.’” Candyce Martin 1999 Irrevocable Tr. v. United States, 739 F.3d

1204, 1210 (9th Cir. 2014) (citation omitted) (quoting 26 U.S.C. § 6231(a)(3)


                                           3
(2000)). “‘[P]artnership losses . . . are . . . partnership items’ of the partnerships

that initially reported the losses.” Russian Recovery Fund Ltd. v. United States, 101

Fed. Cl. 498, 505 (2011) (quoting Sente Inv. Club P’ship v. Comm’r, 95 T.C. 243,

247 (1990)), aff’d, 851 F.3d 1253 (Fed. Cir. 2017). Moreover, “the IRS must

adjust a partnership item at the partnership level that first produces the loss (or

gain) in question.” Id.

      Here, it is undisputed that the Loss was first reported in West Ventures’

Form 1065, and it was not reported in Sleiman Two’s Form 1065 for the 1999 tax

year. This makes sense, because the Loss was produced by West Ventures’

redemption of its partnership interest in Sleiman Two. Therefore, the FPAA, to the

extent it disallowed the Loss, was properly issued to West Ventures, the entity that

first produced and reported it.

      In Candyce Martin, we specifically rejected West Ventures’ argument in

analogous circumstances. Analyzing a tax shelter structure almost identical to the

one at issue here, we observed that “the IRS could have issued an FPAA” to the

partnership, like West Ventures here, that claimed losses stemming from its

redemption of interests in another partnership (here, Sleiman Two). 739 F.3d at

1212. We repeatedly referred to those losses, which were analogous to the Loss, as

partnership items of the redeeming entity—in this case, West Ventures. Id. at

1210–12. And we rejected the idea that the losses could have originated with the


                                            4
non-reporting partnership, which in this case was Sleiman Two. Id. at

1213. Accordingly, Candyce Martin establishes that, for the purposes of

disallowing the Loss, the FPAA was properly issued to West Ventures.

      West Ventures’ secondary argument, that the FPAA was untimely, depends

on the conclusion that the Loss was not a partnership item of West Ventures. But,

as described above, we conclude that the Loss was a partnership item of West

Ventures. Accordingly, without ruling upon the full extent of the scope of the

Form 872-P agreements extending the Commissioner’s deadline to make

assessments related to West Ventures, the FPAA was timely here.

      AFFIRMED.




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