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his bankruptcy estate should be treated as separate “partners”
for purposes of section 6226(f).
i. Should a Debtor and His Bankruptcy Estate Be
Treated as One or Two Partners?
We believe that a partner in bankruptcy and his bankruptcy
estate are appropriately treated as a single partner for purposes
of TEFRA procedures.8 While the bankruptcy estate arises as a
distinct legal entity upon the debtor’s filing of a petition for
relief, the estate cannot be characterized as unrelated to the
debtor. Rather, the bankruptcy estate functions as the debtor’s
economic proxy, created to facilitate the disposition of the
debtor’s property pursuant to the Federal bankruptcy laws. It is
between these two related entities that the beneficial ownership
of a single partnership interest will change hands through the
course of the bankruptcy proceeding. See 11 U.S.C. sec.
541(a)(1) (1994) (initial transfer to the bankruptcy estate); id.
sec. 554(a) (permitting bankruptcy trustee to abandon property of
the estate that is burdensome or of inconsequential value); id.
sec. 726(a)(6) (distribution to the debtor of any property of the
estate that remains after allowed claims have been satisfied).
When viewed from the perspective of the partnership in its
determination of each partner’s distributive share of partnership
8 Mr. Katz and his bankruptcy estate each satisfy the
definition of a partner under sec. 6231(a)(2). However, we do
not interpret this characterization as requiring that the two be
treated as separate partners under the TEFRA procedures.
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