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The focus of petitioners’ legal analysis is on section
301.6231(a)(3)-1(a)(4), Proced. & Admin. Regs., and the
illustration of those rules contained in section 301.6231
(a)(3)-1(c)(3), Proced. & Admin. Regs. Petitioners assert
that under those provisions, an item relating to a distri-
bution from the partnership is defined as a nonpartnership
item to the extent that a determination of that item
requires “other information”. Sec. 301.6231(a)(3)-1(c)(3),
Proced. & Admin. Regs. According to petitioners, the
settlement transaction in this case took place between
Admiral and each individual limited partner who joined the
Settlement Agreement, and any item relating to that
transaction would require “information from either Admiral
or the individual partners regarding the settlement”.
Petitioners assert that any such item would not be a
partnership item because it requires information that is
“not in the possession or control of the partnership.”
We disagree with petitioners’ legal analysis and with
the underlying factual premise of that analysis. Contrary
to petitioners’ position, the determination of whether an
item is a partnership item does not depend upon whether the
item is determinable from information actually available at
the partnership level. Cf. Dial U.S.A., Inc. v. Commis-
sioner, 95 T.C. 1, 4 (1990) (defining a subchapter S
corporation item). The critical factor is whether the
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