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partnership procedures. Secs. 6221-6233; see Tax Equity & Fiscal
Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec. 401(a),
96 Stat. 648.
Under the TEFRA partnership procedures, the tax treatment of
items of income, loss, deductions, and credits is determined in
partnership-level proceedings rather than in separate proceedings
involving each partner. Sec. 6221; H. Conf. Rept. 97-760, at
599, (1982), 1982-2 C.B. 600, 662.
Petitioner’s claimed loss from Arcanum is a partnership
item, sec. 6231(a)(3); Sente Inv. Club Pship. of Utah v.
Commissioner, 95 T.C. 243, 247 (1990); Maxwell v. Commissioner,
87 T.C. 783, 790 (1986); and must be decided in a partnership
proceeding, Carmel v. Commissioner, 98 T.C. 265, 267 (1992);
Trost v. Commissioner, 95 T.C. 560, 563 (1990); Maxwell v.
Commissioner, supra at 787-788, unless Arcanum is exempt from
TEFRA as a small partnership under section 6231(a)(1)(B).
2. Small Partnership Exemption
Partnerships with 10 or fewer partners, each of whom is a
natural person or an estate and none of whom is a pass-thru
partner, e.g., a partnership or trust, are exempt from the TEFRA
partnership procedures. Sec. 6231(a)(1)(B), (a)(9). Petitioner
contends that Arcanum is not subject to the TEFRA procedures
because it was a small partnership for purposes of section
6231(a)(1)(B).
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