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For purposes of the preceding sentence, a husband and wife
(and their estates) shall be treated as 1 partner.
[Sec. 6231(a)(1)(B)(i).1]
Congress enacted the small partnership exception in TEFRA to
ensure that only "simple" partnerships would be excepted. See
McKnight v. Commissioner, 99 T.C. 180, 185 (1992), affd. 7 F.3d
447 (5th Cir. 1993); Tax Compliance Act of 1982 and Related
Legislation: Hearings on H.R. 6300 Before the House Committee on
Ways and Means, 97th Cong., 2d Sess. 259-261 (1982). These
simple partnerships were described in the aforesaid legislative
history as partnerships whose members "treat themselves as co-
ownerships rather than partnerships, and each co-owner resolves
his own tax responsibilities separately as an individual with the
IRS."
A small partnership may elect to have the TEFRA partnership
procedures apply. See sec. 6231(a)(1)(B)(ii). If made, the
election will apply for the taxable year of election and all
subsequent taxable years unless revoked with the consent of the
Secretary. See McKnight v. Commissioner, supra at 185.
In this case, under section 6231(a)(1)(B)(i), Executive Inn
is deemed to have had only two partners--petitioners as husband
1The above version of the statute applies to the tax years
1994 and 1995 involved here. The Taxpayer Relief Act of 1997,
Pub. L. 105-34, sec. 1234(a), 111 Stat. 788, 1024, amended sec.
6231(a)(1)(B)(i), effective for partnership tax years ending
after Aug. 5, 1997.
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Last modified: May 25, 2011