14
Respondent also claims that two portions of the regulation
support his argument that a reallocation of partnership items
from the partners of record to the allegedly true and actual
partners is a partnership item. First, respondent claims that
section 301.6231(a)(3)-1(a)(1)(i), Proced. & Admin. Regs.,
includes as a partnership item a determination of the
partnership’s aggregate and each partner’s share of “income,
gain, loss, deduction, or credit of the partnership”. Sec.
301.6231(a)(3)-1(a)(1)(i), Proced. & Admin. Regs. We disagree
with respondent that a determination of whether the corporate
partners in TWA and GTWP were shams is a partnership item under
this section of the regulations.
The aggregate income, gain, loss, deductions and credits of
the partnership are not in dispute.9 Moreover, for GTWP and TWA,
the determination of whether a partner is a corporation or an
individual has no impact on the partnership level issues covered
by the regulation. There is also no dispute about the amount of
the allocations made to the partners, whether they be
corporations or individuals. In fact, a determination that any
of the partners is an individual--rather than a corporation--for
Federal tax purposes does not require an adjustment to the
9 As stated previously, adjustments to TWA and GTWP’s
income, gain, loss, deductions and credits are not in dispute.
The only liability created by the disputed adjustments is to
create self-employment tax liability for the individual partners.
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