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that the partnership is required to make with respect to an
amount, the character of an amount, or the percentage interest of
a partner in the partnership, for purposes of the partnership
books and records or for furnishing information to a partner”.
Sec. 301.6231(a)(3)-1(a)(4), Proced. & Admin. Regs.
Respondent argues that a determination of the identity of
the partners relates to contributions to the partnership and
distributions from the partnership. However, the regulation
classifies an item as a partnership item only “to the extent that
a determination of the item can be made” by the partnership. In
this case, the identity of the partners is not a partnership item
because the partnerships cannot conclusively make such a
determination. Hambrose Leasing v. Commissioner, supra at 311.
The partnership cannot determine whether its corporate partners
should be respected for Federal tax purposes without
consideration of information that is not available at the
partnership level. For example, such a determination requires
consideration of the manner in which the corporation’s activities
were conducted, whether it was properly formed, whether it has a
valid purpose, and whether it actually conducts business. Moline
Props., Inc. v. Commissioner, 319 U.S. 436 (1943). Moreover,
most of the evidence relevant to determining whether the
corporation or the individual is the partner centers on the acts,
motives, and intentions of the individuals and not on actions
taken by the partnership.
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