On January 22, 2020, the Tax Court issued a Memorandum Opinion in the case of Manroe v. Commissioner (T.C. Memo. 2020-16). The issue presented in Manroe v. Commissioner was whether the Tax Court had jurisdiction over the partners to redetermine the penalties at issue in a partner-level proceeding. Background to Manroe v. Commissioner The case stems from a tax shelter transaction, in which the petitioners ultimately conceded that the partnership at issue was a sham, lacked economic purpose, and was formed solely for tax avoidance purposes. So, that’s the starting point. The Tax Court sustained the 40% accuracy-related penalty for gross valuation misstatement under IRC § 6662(h). Subsequently the IRS issued statutory notices of deficiency (SNODs) to the petitioners determining deficiencies and accuracy-related penalties. Petitioners timely filed a petition for redetermination, in which the petitioners asserted that the IRS had made premature assessments of the deficiencies. Jurisdiction The Tax Court’s…