Opinion ID: 187509
Heading Depth: 1
Heading Rank: 4

Heading: Partnership Items

Text: The next question raised by Petaluma's argument is whether the sham determination was a partnership item. The Internal Revenue Code states that partnership item means 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. 26 U.S.C. § 6231(a)(3). Thus a partnership item must be (1) required to be taken into account . . . under any provision of subtitle A and (2) identified by regulation as more appropriately determined at the partnership level. Id. We conclude that the determination that Petaluma was not a valid partnership meets both elements of this test.