Poison Creek Ranches #1, Ltd., Poison Creek Ranches #2, Ltd., Poison Creek Ranches #3, Ltd., Poison Creek Ranches #4, Ltd., Walter J. Hoyt, III, Tax Matters Partner, et al. - Page 21

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          6231(a)(3).  The regulations provide that such items include:               
                    (1) The partnership aggregate and each partner's share            
               of each of the following:                                              
                    (i) Items of income, gain, loss, deduction, or                    
               credit of the partnership;                                             
                         *    *    *    *    *    *    *                              
                    (v) Partnership liabilities (including determinations             
               with respect to the amount of liabilities, whether                     
               liabilities are nonrecourse, and changes from the preceding            
               taxable year); and                                                     
                         *    *    *    *    *    *    *                              
                    (4) Items relating to the following transactions, to              
               the extent that a determination of such items can be made              
               from determinations that the partnership is required to make           
               with respect to an amount, the character of an amount, or              
               the percentage interest of a partner in the partnership, for           
               purposes of the partnership books and records or for                   
               purposes of * * * furnishing information to a partner:                 
                    (i) Contributions to the partnership;                             
                    (ii) Distributions from the partnership; and                      
                    (iii) Transactions to which section 707(a) applies                
               (including the application of section 707(b)).                         
          Sec. 301.6231(a)(3)-1(a), Proced. & Admin. Regs.                            
               All partners who held an interest in the partnership for the           
          taxable year at issue generally will be treated as parties to a             
          partnership action.  Sec. 6226(c).  However, a partner is not a             
          party if he or she does not have an interest in the outcome of              
          the proceeding because such partner's partnership items have                
          become nonpartnership items pursuant to subsection (b) of section           
          6231.  Sec. 6226(d).  A partner's partnership items will be                 
          treated as nonpartnership items as of the date on which the                 
          partner enters into a settlement agreement with the respondent              





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