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The regulations defining "partnership items" were first
proposed in the Federal Register on January 14, 1983. The
proposed regulations gave public notice of the Treasury's intent
to make the regulations effective with respect to partnership
years beginning after September 3, 1982, the date TEFRA was
enacted. Sec. 1.6231(c), Proposed Proced. & Admin. Regs., 48
Fed. Reg. 1760 (Jan. 14, 1983). The proposed regulations
enumerated items of income, loss, deduction, or credit to be
treated as more appropriately determined at the partnership level
than at the partner level, and, therefore, as partnership items.
Id. The regulations became final, without substantial change, on
April 15, 1986. 51 Fed. Reg. 13212 (Apr. 18, 1986). Section
301.6231(a)(3)-1(d), Proced. & Admin. Regs., states: "This
section shall apply with respect to partnership taxable years
beginning after September 3, 1982." These regulations were
issued pursuant to the authority of sections 7805(b), 6230(k),
and 6231(a)(3).
Section 7805(b) provides:
SEC. 7805(b). RETROACTIVITY OF REGULATIONS OR
RULINGS.--The Secretary may prescribe the extent, if
any, to which any ruling or regulation, relating to the
internal revenue laws, shall be applied without
retroactive effect.
The Code thus contemplates that a regulation is to operate
retroactively except to the extent that the Commissioner provides
that it shall be applied without retroactive effect. Butka v.
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