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The term “affected item” means “any item to the extent such
item is affected by a partnership item.” Sec. 6231(a)(5). If a
change in a partner’s tax liability with respect to an affected
item requires a partner-level determination, then, to that extent
(and to that extent only), it is a computational adjustment
subject to the deficiency procedures. See sec. 6230(a)(2)(A)(i);
sec. 301.6231(a)(6)-1T(a), Temporary Proced. & Admin. Regs.,
52 Fed. Reg. 6790-6791 (Mar. 5, 1987).
2. Partnership Items
A partnership, as such, is not subject to the income tax;
rather, persons carrying on business as partners are liable for
income tax in their separate or individual capacities. See sec.
701. Nevertheless, subchapter C describes a set of procedures
whereby the tax treatment of items of partnership income, loss,
deductions, and credits are determined at the partnership level
in a unified proceeding rather than in separate proceedings with
the partners. Our role in that unified proceeding is limited by
section 6226(f) to the determination (and allocation) of
partnership items. We have no authority under section 6226(f) to
determine anything else, not any affected item, and not the tax
liability of any partner.
As discussed supra in section II, equitable recoupment is in
the nature of a defense to a claim for payment. If, following
this proceeding, respondent does make a claim for payment, it
will be from the partners of the partnership (the partners),
following an assessment of a tax liability resulting from a
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