11
computing the taxable income or loss. See sec.
1.704-1(b)(1)(vii), Income Tax Regs." Because the return and
Schedules K-1 for Makalu during the relevant periods reflect only
net loss and the partners' distributive share of that loss, the
same share rule, that each partner's share of each partnership
item was the same as his share of every other item available for
distribution during the relevant period, was satisfied.
Petitioners initially contend that Makalu fails to satisfy
the same share requirement in that there is disproportionate
treatment of items due to and including guaranteed payments and
basis adjustments. However, as we clearly stated in McKnight v.
Commissioner, 99 T.C. at 184, such items are not considered
"partnership items" for purposes of the same share requirement.
Petitioners appear to concede this position in their posttrial
briefs, and, in the alternative, argue that the disproportionate
allocations of the partners' capital accounts is sufficient to
place Makalu outside the scope of section 6231(a)(1)(B).
In McKnight v. Commissioner, 99 T.C. at 186, we agreed with
the Commissioner that "the rationale for limiting the partnership
items applicable to the same share rule was to ensure that only
items [having] a direct taxable impact on the partners, i.e.,
items flowing through to the partners from the partnership under
subtitle A, be analyzed." We further agreed that "items that are
consistently exclusive to a partner would not eliminate the
availability of the small partnership exception." Id.
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