-6-
failed to comply with the partnership audit and litigation procedures).
The unified S corporation audit and litigation procedures
are set forth in subchapter D of chapter 63 of subtitle F.2
Section 6241 provides: “Except as otherwise provided in
regulations prescribed by the Secretary, the tax treatment of any
subchapter S item shall be determined at the corporate level.”
Eastern States Cas. Agency, Inc. v. Commissioner, 96 T.C. 773,
775 (1991); Dial, USA, Inc. v. Commissioner, 95 T.C. 1, 1-2
(1990). The unified S corporation audit and litigation
procedures were intended to promote the consistent treatment of S
items among S corporation shareholders. See Allen Family Foods,
Inc. v. Commissioner, T.C. Memo. 2000-327; S. Rept. 97-640, at 25
(1982), 1982-2 C.B. 718, 729.
Pursuant to the authority granted under section 6241, the
Secretary promulgated regulations prescribing exceptions to the
unified S corporation audit and litigation procedures. In
particular, section 301.6241-1T(c)(2)(ii), Temporary Proced. &
Admin. Regs., supra, provides that the unified S corporation
2 Subchapter D of chapter 63 of subtitle F was codified
pursuant to the Subchapter S Revision Act of 1982, Pub. L. 97-
354, sec. 4(a), 96 Stat. 1691-1692, effective with respect to tax
years beginning after Dec. 31, 1982. Secs. 6241-6245 were
repealed under the Small Business Job Protection Act of 1996,
Pub. L. 104-188, sec. 1307 (c)(1), 110 Stat. 1755, effective with
respect to tax years beginning after Dec. 31, 1996.
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