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any actual agreement, oral or otherwise, among the Pecaris
partners, or that the reduced distribution of cash to petitioner
from the escrow amounted to a de facto amendment of the Pecaris
partnership agreement. In the circumstances of this case, we do
not indulge in any of the constructions that petitioners have
asked us to adopt to determine that none of the Pecaris gain was
allocable to petitioner.
While the characterization of tax items is determined at the
partnership level, sec. 702(b), a partner must include his
distributive share of partnership income in gross income whether
or not he has received any distributions from the partnership,
sec. 702(c). This is true even when the partner's right to
receive distributions may be contingent or forfeitable, United
States v. Basye, 410 U.S. 441 (1973), or the partnership's income
has been concealed by another partner. Starr v. Commissioner,
267 F.2d 148 (7th Cir. 1959), affg. in part, revg. in part, and
remanding T.C. Memo. 1958-50. Because the partnership serves as
a conduit through which income is allocated to each partner in
proportion to his partnership interest, the partner takes these
amounts into income in his taxable year in which the
partnership's taxable year ends. Secs. 702(a), 706(a).
Section 704(a) provides that a partner's distributive share
of partnership income, gain, loss, or deduction is generally
determined by the partnership agreement. According to the
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