- 16 - and any error in the computational adjustment must be challenged in a refund suit. See sec. 6230(c); see also sec. 6231(a)(5) (defining “affected item” as “any item to the extent such item is affected by a partnership item”). If an increased liability stemming from an affected item requires a factual determination at the partner level, however, the normal deficiency procedures outlined in sections 6212 and 6213 apply, and the Commissioner must issue an affected items notice of deficiency to the partner in order to assess tax attributable to the affected item. See sec. 6230(a)(2)(A)(i); see also sec. 301.6231(a)(6)-1T(a)(2), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 3840 (Jan. 26, 1999).12 As to respondent’s determination in the affected items notice of deficiency concerning the long-term capital gain, the parties dispute whether that computational adjustment required a factual determination at the partner level. Petitioners argue 12 Sec. 301.6231(a)(6)-1T(a)(2), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 3840 (Jan. 26, 1999), states: (2) Changes in a partner’s tax liability with respect to affected items that require partner level determinations (such as a partner’s at-risk amount to the extent it depends upon the source from which the partner obtained the funds that the partner contributed to the partnership) are computational adjustments subject to deficiency procedures. Nevertheless, any penalty, addition to tax, or additional amount that relates to an adjustment to a partnership item may be directly assessed following a partnership proceeding, based on determinations in that proceeding, regardless of whether partner level determinations are required.Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: November 10, 2007