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partners. These provisions centralized the tax treatment of
partnership items and resulted in equal treatment for partners
through the uniform adjustment of each partner’s tax liability in
a single proceeding. Chimblo v. Commissioner, 177 F.3d 119, 120-
121 (2d Cir. 1999), affg. T.C. Memo. 1997-535; Harbor Cove Marina
Partners Pship. v. Commissioner, 123 T.C. 64, 78-79 (2004). Once
an action for readjustment of partnership items is commenced by
either the tax matters partner or a notice partner, any partner
with an interest in the outcome of that action may participate in
it. Sec. 6226(c) and (d); Rule 245.
Pursuant to section 6221, the tax treatment of any
partnership item is determined at the partnership level. A
“partnership item” is any item which must be taken into account
for the partnership’s taxable year to the extent that regulations
prescribe it as an item more appropriately determined at the
partnership level than at the partner level. Sec. 6231(a)(3).
The regulations provide further that a partnership item not only
includes those items expressly listed in the regulations, but
also includes “the legal and factual determinations that underlie
the determination of the amount, timing, and characterization of
items of income, credit, gain, loss, deduction, etc.” Sec.
301.6231(a)(3)-1(b), Proced. & Admin. Regs.
The determination of a guaranteed payment is a partnership
item. Sec. 301.6231(a)(3)-1(a)(2), Proced. & Admin. Regs.
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Last modified: May 25, 2011