- 8 -
was not subject to the FSAA procedure. However, we noted that
the temporary regulation by its terms was applicable to a taxable
year of an S corporation only if the due date of the
corporation's return for that year was on or after January 30,
1987. Eastern States Casualty Agency v. Commissioner, supra at
775. By contrast, the regulations in issue here are by their
terms effective for partnership taxable years ending after
September 3, 1982.
We reject petitioner's argument that the regulations should
not be applied here. The legislative history of TEFRA clearly
indicates Congress' intent generally to treat a partnership's
items of income, loss, deduction, and credit as "partnership
items" for purposes of the unified audit and litigation
procedures. See H. Conf. Rept. 97-760, at 600, 604 (1982), 1982-
2 C.B. 600, 662. Further, the issuance of the proposed
regulations in January of 1983, only a few months after the
enactment of TEFRA, provided guidance as to which items fell
within the definition of "partnership items" and put the public
on notice that the regulations would be applied to partnership
years beginning after the date of TEFRA's enactment. The
proposed regulations gave petitioners "warning of things to
come". United States v. Fenix & Scisson, Inc., 360 F.2d 260, 267
(10th Cir. 1966). Accepting petitioner's contentions would lead
to the absurd result that the TEFRA provisions would have little
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