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partnership-level proceeding is invalid to the extent it relates
to a partnership item or an affected item. See GAF Corp. v.
Commissioner, 114 T.C. 519, 524-526 (2000).
No FPAA was issued by respondent and no partnership-level
proceedings have been commenced regarding the prepetition
partnership losses in the present case. Accordingly, if the NOL
carryovers at issue constitute affected items as petitioners
contend, we must grant the motion to dismiss on the basis that
the notice of deficiency is invalid as it relates to those items.
With this procedural framework in mind, we turn to the issue of
whether the NOL carryovers may be properly characterized as
affected items under the TEFRA procedures.
2. Definition of Affected Item and Partnership Item
Section 6231(a)(5) defines an “affected item” as any item to
the extent such item is affected by a partnership item. See also
N.C.F. Energy Partners v. Commissioner, supra at 743-745; Maxwell
v. Commissioner, supra at 792-793; sec. 301.6231(a)(5)-1T,
Temporary Proced. & Admin. Regs., 52 Fed. Reg. 6790 (Mar. 5,
1987). Section 6231(a)(3) defines the term “partnership item” as
any item required to be taken into account for the partnership’s
taxable year, to the extent the regulations establish that such
item is more appropriately determined at the partnership level
than at the partner level. The regulations include in the
definition of a partnership item each partner’s share of items of
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