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"partnership items" for purposes of section 6231.8 Subsequently,
the case was submitted on the basis of the record. Petitioners
did not file a brief, but respondent filed a brief within the
time designated by the Court.
OPINION
In the instant case, the fundamental issue is whether there
was a section 752(b) distribution adjustment by any of the
partnerships to those limited partners who accepted the
settlement with Admiral and the partnerships. Specifically, the
parties diverge on the legal substance and effect of the
Settlement Agreement. Respondent asserts that the financial
arrangements embodied in the Settlement Agreement resulted in a
section 752(b) distribution to petitioners. Conversely,
petitioners contend that none of the partnerships made such a
distribution to them.
Section 61 requires that certain amounts be included in
gross income. Section 61(a)(13) provides, in part, that gross
income means all income from whatever source derived, including,
inter alia, distributive shares of a partnership's gross income.
Section 701 provides that a partnership is not liable for
Federal income taxes; instead, persons carrying on business as
partners are liable in their separate or individual capacities
for the income taxes arising from partnership operations. In
8The motion was denied. Dakotah Hills Offices Ltd.
Partnership v. Commissioner, T.C. Memo. 1996-35.
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