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Petitioners contend that, since for purposes of the section
179(b)(3)(A) limitation they may aggregate taxable incomes from
their different trades or businesses, they should be able to
aggregate their taxable income with the income of the partnership
under section 179(d)(8) to determine the partnership's taxable
income. In this regard, petitioners argue that section
179(b)(3)(A) applies only to the taxable income "of the taxpayer"
derived from the trade or business "by the taxpayer".
Petitioners contend that under section 701 a partnership is not a
taxpayer; therefore, that section cannot apply to a partnership.
The taxable income limitation in section 179(b)(3)(A) is,
therefore, meaningless when applied to a partnership, and section
1.179-2(c)(2), Income Tax Regs., is accordingly invalid.
The gravamen of petitioners' argument is that a partnership
is not a taxpayer under the definition contained in section
7701(a)(14). It should be noted initially that this is literally
incorrect. A taxpayer is defined as "any person subject to any
internal revenue tax." Sec. 7701(a)(14). In turn, a person
"shall be construed to mean and include * * * [inter alia] a
* * * partnership". Sec. 7701(a)(1). Under section 701 a
partnership generally is not "subject to the income tax", rather
the partners are "liable for income tax only in their separate or
individual capacities." But, a partnership may be subject to a
variety of internal revenue taxes, including, e.g., employment
taxes under section 3111(a) (United States v. Hays, 877 F.2d 843
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