* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3.

** Honorable Wesley E. Brown, Senior District Judge, U nited States District Court for the District of Kansas, sitting by design ation. 

## F I L E D United States Court of Appeals Tenth Circuit 

### JUL 30 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

JUDITH W. DAVIS,

Petitioner,

v. COMMISSIONER OF INTERNAL REVENUE, Respondent. No. 97-9020 Appeal from U.S. Tax Court (T.C. No. 11713-94)

ORDER AND JUDGMENT *

Before TACHA and McKAY , Circuit Judges, and BROWN, ** Senior District Judge.

After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materiallyassist the determination of-2-

this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument. Respondent Commissioner of Internal Revenue issued a statutory notice of deficiency to petitioner Judith W. Davis determinin g deficiencies in her income taxes for the years 1990 and 1991 and additions to tax under 26 U.S.C. § 6651(a)(1) for 1990 and 1991 and under 26 U.S.C. § 6654 for 1991. Ms. Davis filed a petition in Tax Court disputing the determi nations. On February 18, 1997, the Tax Court issued a memorandum findings of fact and opinion in favor of the Commissioner. On May 5, 1997, the Tax Court entere d a decision setting forth the amount of the deficiencies and additions to tax . Ms. Davis appealed, and we affirm.
I. Before addressing the merits of this appeal, we mus t consider whether we have jurisdiction over the appeal. At this court’s request, the parties have addressed (1) whether this court has jurisdiction w here the notice of appeal was filed more than ninety days after entry of the Tax Court’s decision, see Fed. R. App. P. 13(a), and (2) whether this court h as jurisdiction where the notice of appeal was filed while a motion for reconsiderat ion was pending. Both parties correctly argue that this court has jurisdiction to consider this appeal.-3-

After the Tax Court issued its interlocutory memorandum findings of fact and opinion, on February 18, 1997, Ms. Davis filed a motion to reconsider. The Tax Court denied the motion on March 27, 1997. The reafter, the parties filed their respective computations of taxes owed. On May 5, 1997, the Tax Court entered a final decision adopting the Commissioner’ s computations and setting forth the income taxes and additions to tax owed by Ms. Davis. On June 4, 1997, within the thirty days prescribed for a tolling motion, see Tax Ct. R. 162, Ms. Davis postmarked a timely motion to vacate or revise the decision, see 26 U.S.C. § 7502(a). The Tax Court denied the moti on on June 20, 1997. Eighty-nine days later, on September 17, 1997, Ms. Davis postmarked a timely notice of appeal. See Fed. R. App. P. 13(b); 26 U.S.C. § 7502(a); 26 C.F .R. § 301.7502-1. Although Ms. Davis filed the June 4, 1997, motion t o vacate or revise the decision after filing the March 26, 1997, motio n to reconsider, there is no problem with tacking of tolling motions. See Okon v. Commissioner , 26 F.3d 1025, 1026 (10th Cir. 1994) (tolling motions may no t be tacked to perpetuate prescribed appeal period from Tax Court decision). The February 18, 1997, memorandum findings of fact and opinion was merely an interlocutory ruling sustaining the Commissioner’s determinations and de ciding Ms. Davis would be liable for some amount of taxes and additions to tax. Cf. Albright v. UNUM Life-4-

Ins. Co. , 59 F.3d 1089, 1092-93 (10th Cir. 1995) (order det ermining liability but leaving damages to be calculated is not final). Th e May 5, 1997, decision was the Tax Court’s final order determining the amount of tax liability and additions
to tax. See Fed. R. App. P. 13(a) (referring to “decision”). Thus, Ms. Davis’ motion to reconsider the interlocutory opinion was not a tolling motion. Cf. Wagoner v. Wagoner , 938 F.2d 1120, 1122 n.1 (10th Cir. 1991) (motion asking district court to exercise discretionary authority to revise interlocutory ruling before final judgment does not “call into play the timing and tolling considerations attendant upon motions to alter or amend judgment under Fed. R. Civ. P. 59(e)”). We conclude Ms. Davis filed her notice of appeal wi thin the prescribed ninety days. See Fed. R. App. P. 13(a). Also, we conclude no motio n for reconsideration remained pending when she filed hernotice of appeal. Accordingly, we have jurisdiction to consider this appeal. See 26 U.S.C. § 7482(a)(1).
II. The issues heard and decided by the Tax Court conce rned (1) whether amounts Ms. Davis received from a subchapter S corp oration were wages and (2) whether she was entitled to a deduction in 1990 for a net operating loss in excess of the amount of the deduction allowed by th e Commissioner. On appeal,1 Ms. Davis argues in her reply brief that she could not meet her burden of

proof before the Tax Court because the Commissionerhad all relevant records for three years until the Tax Court rendered its de cision. She, however, has never argued that the Commissioner precluded her from loo king at these records. We conclude this argument is without merit.

2 Ms. Davis first made these arguments in the Tax Cou rt in her motion to reconsider and motion for deferral of entry of judg ment. The Tax Court denied the motions without explanation. Because it is notclear whether the Tax Court denied the arguments on their merits, we will consider the arguments. Cf. Oyler v. Allenbrand , 23 F.3d 292, 299-300 & n.10 (10th Cir. 1994) (rec ognizing motion to reconsider is not proper means for raisin g new grounds for relief, but entertaining issues on appeal because district court considered them); Burnette v. Dresser Indus., Inc. , 849 F.2d 1277, 1285 (10th Cir. 1988) (declining t o address on appeal issue first raised in motion to reconside r where district court did not consider the issue). -5- Ms. Davis does not specifically dispute the Tax Cou rt’s determinations with regard to these issues. 1 Rather, she argues the Commissioner was required to issue final administrative adjustment reports with respect to a partnership and subchapter S corporation before passing any adjustm ents through to her individual return. According to Ms. Davis, the Com missioner improperly passed through the adjustments without allowing the partne rship and subchapter S corporation to administratively appeal any adjustments. 2 Ms. Davis’ arguments with respect to the subchapterS corporation are based upon 26 U.S.C. §§ 6241-6245 (1988). These pr ovisions do not apply to her case because the subchapter S corporation at is sue has fewer than the requisite number of shareholders. See 26 C.F.R. § 301.6241-1T(c)(2)(ii) (provisions do not apply to subchapter S corporatio n with five or fewer-6-

shareholders); see also R. Ex. B at 8-10 (1989 subchapter S corporation tax return reporting three shareholders); id. Doc. 10 at 3 (stipulation that Ms. Davis owned 100% of subchapter S corporation’s stock in 1 990 and 1991). Thus, a final subchapter S administrative proceeding and ad justment were not required. Ms. Davis’ arguments with respect to the partnershi p are based upon 26 U.S.C. §§ 6221-6231 (1988 & Supp. I 1989). Thes e provisions also do not apply because the partnership at issue has fewer th an the requisite number of partners. See id. § 6231(a)(1)(B)(i) (exception for partnership with ten or fewer partners); 26 C.F.R. § 301.6231(a)(1)-1T (same); see also R. Ex. N. at 10-13 (1989 partnership return showing two individual partners). Even if the partnership had the required number of partners, the provisions still would not apply. “[I]f a partner treats an i tem on the partner’s return consistently with the treatment of the item on the partnership return, the Internal Revenue Service generally cannot adjust the treatme nt of that item on the partner’s return except through a partnership-level proceeding.” 26 C.F.R. § 301.6221-1T(a). If, however, the partner does no t treat the item consistently, the IRS may make an adjustment to the partner’s ret urn without a partnership level proceeding, unless the partner (1) notifies t he Commissioner of the inconsistent treatment or (2) proves, and makes a p roper election, that the partner’s treatment of the item was consistent with the treatment of the item on-7-

the schedule K-1 furnished by the partnership to the partner. See 26 C.F.R. §§ 301.6222(b)-2T; 301.6222(b)-3T. In this case, the partnership reported income from the discharge of indebtedness, § 1231 gain, and ordinary loss items on its 1989 return and provided a schedule K-1 to Ms. Davis reflecting these items. See R. Ex. N at 4, 10. She failed to report the items on her individual tax return. See id. Ex. 7-L at 4. Her treatment of the items was not consisten t with the partnership’s treatment of the items. Nothing indicates that she notified the Commissioner of the inconsistent treatment. The Commissioner, therefore, correctly adjusted her 1989 return to include the partnership items wi thout conducting a partnership level proceeding. Also, after correctly adjusting her 1989 return, the Commissioner properly determined her net operating loss carryover deduction for 1990. The judgment of the United States Tax Court is AFFI RMED. The mandate shall issue forthwith. Entered for the Court

Wesley E. Brown Senior District Judge