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As a result, petitioner argues that these partners have no
partnership interest.
Respondent argues that the Court has jurisdiction to
determine the allocation of items at issue in these cases because
the items are partnership items. Respondent contends that in
order to determine the allocations to be made to the partners who
have not settled on an individual basis, it is necessary for the
Court to consider the capital accounts of all of the partners.
Respondent argues that the provisions of the Tax Equity and
Fiscal Responsibility Act of 1982, Pub. L. 97-248, sec. 402(a),
96 Stat. 324, 648 are procedural, and affect only the type of
proceeding which may be brought, but do not alter the substantive
law of partnerships. Thus, respondent argues, the provisions do
not have the effect of removing partners from the partnership.
The items at issue fall within the definition of partnership
items. The determination of the allocation of partnership items
to the parties to this action requires that we consider the
partnership aggregate of each item, including partnership
capital. A partner's interest in each item is determined based
on the share of total partnership capital contributed by the
partner.
The effect of a partner's accepting the out-of-pocket
settlement is that the partner and respondent have agreed on the
treatment of the partner's share of partnership items for Federal
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