Page 264 - The TEFRA Partnership Audit Rules Repeal:

ALI CLE Live Video Webcast / “The TEFRA Partnership Audit Rules Repeal: Partnership and Partner Impacts” June 7, 2016, Jerald David August and Terence Floyd Cuff
penalties and interest might substitute for penalties and interest that otherwise would be assessed against Marion.
If this analysis is correct, then the penalties and interest should be allocated as part of partnership Net Profits and Net Losses and not specially allocated to a particular partner.
The Real Estate Investors, LLC might have a requirement that Marion is required to make an additional capital contribution to Real Estate Investors, LLC in order to fund the imputed underpayment and interest. In that event, Marion’s capital account should be increased by the capital contribution, and the expense items paid from the contribution likely are allocated to Marion under partners’ interests in the partnership. Marion’s and Kate’s capital accounts should be equal after the adjustments to capital accounts.
24. Application of the Attorney-Client Privilege
a. Attorney-Client Privilege Under Common Law and Federal Rules of Evidence, Rule 501
The attorney-client privilege protects against the disclosure by the client or the attorney of confidential communications made by the client in the course of a professional attorney-client relationship, unless the privilege is later waived.145 The privilege is not absolute and does not attach to all information received or communicated by the attorney.146
145 See United States v. Bisanti, 414 F.3d 168, 171 (1st Cir. 2005); see also Wigmore, EVIDENCE § 2290 (McNaughton rev 1961) for a much cited definition of the rule “(1) Where legal advice of any kind is sought; (2) from a professional legal advisor in his capacity as such; (3) the communications relating to that purpose; (4) made in confidence; (5) by the client; (6) are at his instance permanently protected; (7) from disclosure by himself or by his legal advisor; (8) except the protection may be waived.”
146 See, in general, August, “Attorney-Client Privilege and Work Product Doctrine in Tax Controversies and Tax Litigation”, ALI-CLE Course Materials (12/4/2014) VCWG1204 ALI-CLE. Potential Application of the Common Interest Doctrine As to Partners, Former Partners and Partnership Representative. Often referred to as the “common interest” rule of joint defense privilege.” This rule is not a separate privilege but an extension of the attorney client privilege. As stated by the Second Circuit in United States v. Schwimmer, 892 F.2d 237, 243 (2d Cir. 1989), the “rule serves to protect the confidentiality of communications passing from one party to the attorney for another party where a joint defense effort or strategy has been decided upon
and undertaken by the parties and their respective counsel.”
As explained in Evergreen Trading, LLC ex rel Nussdorf, 100 AFTR2d, 2007-7163, (Fed.
Cl. 2007):
The “common interest doctrine” applies “where the parties undertake a joint effort with respect to a common legal interest,” and is “limited strictly to those communications made to further an ongoing enterprise.” BDO Seidman, 492 F.3d at 816; see Genentech, 101 F.3d at 1389; United States v. Evans, 113 F.3d 1457, 1467
© Terence Floyd Cuff and Jerald David August, 2016
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