First Blood Associates, Richard M. Greenberg, Tax Matters Partner, et al. - Page 11

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          the Goodwins nor respondent disputes that the FPAA's were valid             
          and that the petitions were timely filed in these cases.                    
               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            
               Whether, with respect to the Goodwins, we have jurisdiction            
          over their partnership items depends upon whether they entered              

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