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16, 1993, and not thereafter. Because respondent had no
authority to issue a notice of conversion under section
6231(b)(1)(A) on July 5, 1995, respondent's answer does not
constitute notice under section 6231(b)(1)(A).5
Section 6231(b)(1)(C)
Petitioners also contend that the stipulated decision agreed
to by the parties constituted a settlement agreement that
converted the partnership loss into a nonpartnership item under
section 6231(b)(1)(C). Respondent contends that the stipulated
decision did not convert the partnership loss into a
nonpartnership item because the decision was not "with respect
to" a partnership item. For the following reasons we agree with
respondent.
As mentioned previously, a partnership item may become a
nonpartnership item as of the date that "the Secretary enters
into a settlement agreement with the partner with respect to such
items". Sec. 6231(b)(1)(C) (emphasis added). In this case the
parties agree that the basis for the stipulated decision was the
statute of limitations on assessment under section 6501(a) and
that the merits of the adjustments made by respondent in the
notice of deficiency were not even considered, much less
resolved. Thus, the decision does not reflect any agreement
5 Sec. 6231(b)(2) limits the permissible circumstances in
which the Secretary can issue notice of conversion under sec.
6231(b)(1)(A). We note that petitioners presented no evidence
with respect to the circumstances described in sec. 6231(b)(2).
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