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reasonably relied on the advice of their financial adviser in
making the investment in Arid Land.
Treatment of Partnership Items
The tax treatment of any partnership item generally is
determined at the partnership level pursuant to the unified audit
and litigation procedures set forth in sections 6221 through
6231. Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),
Pub. L. 97-248, sec. 402(a), 96 Stat. 648. The TEFRA procedures
apply with respect to all taxable years of a partnership
beginning after September 3, 1982. Sparks v. Commissioner, 87
T.C. 1279, 1284 (1986); Maxwell v. Commissioner, 87 T.C. 783, 789
n.4 (1986). Partnership items include each partner's
proportionate share of the partnership's aggregate items of
income, gain, loss, deduction, or credit. Sec. 6231(a)(3); sec.
301.6231(a)(3)-1(a)(1)(i), Proced. & Admin. Regs.
"Affected items" are defined under section 6231(a)(5) as any
item to the extent such item is affected by a partnership item.
White v. Commissioner, 95 T.C. 209, 211 (1990). Certain affected
items require a partner level determination. N.C.F. Energy
Partners v. Commissioner, 89 T.C. 741, 744 (1987). Section
6230(a)(2)(A)(i) provides that the normal deficiency procedures
apply to those affected items which require partner level
determinations. For the years at issue, the additions to tax for
negligence are affected items requiring factual determinations at
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