The Supreme Court recently heard oral arguments in the Woods case. The issue involved is whether the government can invoke TEFRA jurisdiction in a TEFRA proceeding at the partnership level to determine valuation overstatement penalties related to a partner's outside overstatement of basis in circumstances in which the partnership entity is found to have been a sham. The issue turns on whether a penalty can be imposed on items such as outside basis, which are not partnership items in a TEFRA proceeding, leaving the taxpayer to present a reasonable cause and good faith defense to the penalty after the TEFRA proceeding is completed and the tax and penalty are paid, in a refund case.
The audio of the oral agruments before the Supreme Court in the Woods case can be found on the SCOTUS web sit.
Supreme Court Web Site