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income, gain, loss, deduction, or credit of the partnership. See
sec. 301.6231(a)(3)-1(a)(1)(i), Proced. & Admin. Regs.
3. Bankruptcy Regulation
The Secretary is authorized to identify by regulations
certain instances in which the treatment of an item as a
partnership item under the TEFRA procedures will interfere with
the effective and efficient enforcement of the Internal Revenue
Code. See sec. 6231(c)(2). The Secretary has identified the
bankruptcy of a partner as one such instance. See sec.
301.6231(c)-7T(a), Temporary Proced. & Admin. Regs. (the
bankruptcy regulation), 52 Fed. Reg. 6793 (Mar. 5, 1987), which
provides as follows:
(a) Bankruptcy. The treatment of items as partnership
items with respect to a partner named as a debtor in a
bankruptcy proceeding will interfere with the effective
and efficient enforcement of the internal revenue laws.
Accordingly, partnership items of such a partner
arising in any partnership taxable year ending on or
before the last day of the latest taxable year of the
partner with respect to which the United States could
file a claim for income tax due in the bankruptcy
proceeding shall be treated as nonpartnership items as
of the date the petition naming the partner as debtor
is filed in bankruptcy.
If the bankruptcy regulation applies to convert a partnership
item into a nonpartnership item, the effect of the conversion is
to except the item from the TEFRA procedures. The tax treatment
of the item therefore may be determined in accordance with the
deficiency procedures applicable to the partner’s individual tax
case. See Computer Programs Lambda, Ltd. v. Commissioner, 89
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