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such information.
8. In determining its basis in the contributed
options, the purported partnership was required to take
into account the amount and character of the contribu-
tion, which included the fair market value and basis of
the contribution, whether the obligation leg was a
“liability” assumed by the partnership, and whether the
legs of the options needed to be aggregated. * * *
[Citations omitted.]
We agree with respondent. Section 6231(a)(3) defines the
term “partnership item” to mean
with respect to a partnership, any item required to be
taken into account for the partnership’s taxable year
under any provision of subtitle A to the extent regula-
tions prescribed by the Secretary provide that, for
purposes of this subtitle, such item is more appropri-
ately determined at the partnership level than at the
partner level.
Section 6231(a)(4) defines the term “nonpartnership item” to
mean “an item which is (or is treated as) not a partnership
item.”
Section 6231(a)(5) defines the term “affected item” to mean
“any item to the extent such item is affected by a partnership
item.”
Section 723 provides in pertinent part that the basis of
property contributed to a partnership by a partner is the ad-
justed basis of such property to the contributing partner at the
time of the contribution.14 Thus, in order for a partnership to
14Sec. 1.723-1, Income Tax Regs., promulgated under sec. 723
further provides in pertinent part:
(continued...)
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