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706(a), which states as a general rule that a partner’s inclusion
of income, loss, deductions, etc., “with respect to a partnership
shall be based on the income, gain, loss, deduction, or credit of
the partnership for any taxable year of the partnership ending
within or with the taxable year of the partner.” (Emphasis
added.) He then applies this rule to the “principle of fixed,
periodic accountings” and draws the conclusion that a “statute of
limitations for assessment of tax liability” makes sense only
when there is an “interlacing of partners’ and partnerships’
taxable years.”
The flaw in this argument is that it reads too much into
section 706(a). That section doesn’t state a grand, overarching
principle that all partnership and affected items of a
partnership’s taxable year must be reflected in a coinciding or
overlapping partner’s taxable year. It governs only the
inclusion of the partnership’s “income, gain, loss, deduction, or
credit of the partnership.” Not all partnership items--and not
all affected items of the sort that are at issue in this case--
fall into one of those five categories.
Kligfeld then turns to section 6226(d)(1)(B), pointing out
that it says that a partner may not be a party to a TEFRA
proceeding after the day on which “the period within which any
tax attributable to such partnership items may be assessed
against that partner expired.” The phrase “such partnership
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