CCA 200848034: At-risk limits require affected-item notices after TEFRA proceeding

Plain-English summary

Chief Counsel advised that a partner's at-risk amount is an affected item whose assessment period is extended by the TEFRA proceeding. The partnership case must determine the liabilities, their allocation, and whether they are recourse or nonrecourse. After that case ends, the IRS must issue affected-item deficiency notices to disallow deductions exceeding each partner's at-risk amount. IRC § 6229(d) requires those notices within one year of an FPAA default or court decision.

Ruling snapshot

• Question: How and when does the IRS apply partners' at-risk limitations after a partnership proceeding?
• Outcome: Advice given. Resolve liability characteristics in the TEFRA case, then issue affected-item notices within the one-year period.
• Key authorities: IRC §§ 465, 6229(d), and 6231; Hambrose v. Commissioner, 99 T.C. 298 (1992).

Full text (IRS public release)

1

ID: CCA-714100-08 Number: 200848034
Office: --------------
Release Date: 11/28/2008

UILC: 6231.05-00

From: -------------------
Sent: Mon 7/14/2008 10:09 AM
To: ----------------------
Cc: ------------------------------------------------------------------------------------------------------------------- Subject: RE: FPAA Review

At risk is an affected item whose statute is extended by the TEFRA proceeding. See Ginsburg v. Commissioner, --T.C. -- (2007); Hambrose v. Commissioner, 99 T.C. 298 (1992). In the partnership proceeding we must determined the amount of liabilities, their allocation and whether they are recourse or non-recourse. Dakota Hills v. Commissioner. Following the TEFRA proceeding we will issue affected item notices of deficiency to disallow partnership deductions to the extent they exceed the partners' amounts at risk. We must issue such notices with one year of the FPAA default or court decision under section 6229(d).