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Seneca, Ltd. v. Commissioner, 92 T.C. 363, 365 (1989), affd.
without published opinion 899 F.2d 1225 (9th Cir. 1990). Neither
Mr. Newman nor respondent disputes that the FPAA's were valid and
that the petition was timely filed in this case.
Pursuant to the TEFRA provisions the tax treatment of
partnership items generally is to be determined at the
partnership level. See Maxwell v. Commissioner, 87 T.C. 783, 788
(1986). Section 6226(c)(1) provides that if a partnership action
is brought under either section 6226(a) or (b) each person who
was a partner in such partnership at any time during the year in
issue shall be treated as a party to such action. However,
section 6226(d)(1)(A) provides, in pertinent part, that section
6226(c) shall not apply to a partner "after the day" on which the
partnership items of such partner for the particular partnership
taxable year become nonpartnership items by reason of one of the
events described in section 6231(b). A settlement agreement
between the Secretary and a partner is among the events causing
the conversion of partnership items into nonpartnership items.
Sec. 6231(b)(1)(C). Section 6224(c) provides that in the absence
of a showing of fraud, malfeasance, or misrepresentation of fact,
a settlement agreement between the Secretary and a partner with
respect to the determination of partnership items for any
partnership taxable year shall be binding on all parties to such
agreement.
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