Michael V. Domulewicz and Mary Ann Domulewicz - Page 16




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          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.                  





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