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under the exception to the definition of a partnership as
provided in section 6231(a)(1)(B) and did not elect out of the
exception, respondent was not required to issue it an FPAA before
mailing the deficiency notice to petitioner.
National Land Bank does not fall within the small
partnership exception because one of its partners, Speck, is a
trust and not an individual. However, respondent used the
indirect bank deposit method to calculate petitioner’s income.
Section 6231(c)(1)(C) establishes a special rule where “indirect
methods of proof of income” are utilized. This rule permits
respondent to treat what would otherwise be partnership items, as
nonpartnership items for purposes of sections 6221 through 6234.11
The rule applies to the extent regulations issued by the
Secretary provide that treatment of an item as a partnership item
will interfere with the effective and efficient enforcement of
the revenue laws.
Section 301.6231(c)-6T, Temporary Proced. & Admin. Regs.,
52 Fed. Reg. 6793 (Mar. 5, 1987), provides that the treatment of
items as partnership items with respect to a partner whose income
is determined by an indirect method of proof will interfere with
11 A partnership item with respect to a partnership is
defined as “any item required to be taken into account for the
partnership’s taxable year under any provision of subtitle A to
the extent regulations prescribed by the Secretary provide that,
for purposes of this subtitle, such item is more appropriately
determined at the partnership level than at the partner level.”
Sec. 6231(a)(3).
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