W. Robert Curtis and Cheryl L. Riess-Curtis - Page 11

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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            
               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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