Crop Associates - Page 6

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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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