Ezel / IRS Rulings / 200848042

CCA 200848042: Indirect partner K-1 adjustment needs no separate TEFRA proceeding

Number
200848042
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Effect of Failure to Notify
Topics
Procedure, penalties, and administration
Code sections
§ 6222
Ruling dated
July 17, 2008
Publicly released
November 28, 2008
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2008, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2008
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that the IRS could make computational adjustments conforming both direct and indirect partners' returns to a TEFRA partnership's Schedules K-1. A partnership with a flow-through entity as a partner was necessarily subject to TEFRA. An intermediate partnership's own non-TEFRA status did not prevent direct assessment of its partners when that intermediate entity reported inconsistently with the source partnership. No separate TEFRA proceeding was required in those circumstances.

Ruling snapshot

  • Question: Must the IRS open another TEFRA proceeding before conforming indirect partners to a source partnership's K-1 reporting?
  • Outcome: Advice given. No; computational adjustments and direct assessment may proceed through the tier.
  • Key authorities: IRC § 6222.

Full text (IRS public release)

1

ID: CCA-717907-08 Number: 200848042
Office: --------------
Release Date: 11/28/2008

UILC: 6222.03-00

From: -------------------
Sent: Thu 7/17/2008 9:07 AM
To: --------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
--------------
Subject: RE: K-1 Discrepancies

We can make computational adjustments conforming partners' returns to a TEFRA partnership Schedules
K-1, regardless of whether the partner is a direct partner, or indirect partner in the TEFRA partnership.

A partnership that has a flow through entity as a partner will always be subject to TEFRA. The fact that
XYZ is a partner in ABC, and that XYZ is not itself a TEFRA partnership, does not prohibit us from making
a direct assessment of the partners of XYZ based on the fact that XYZ filed inconsistently with ABC.

No TEFRA proceeding needs to be initiated in the above circumstances.

What does the Code say today, for your facts?

This advice was written for IRS staff and cannot be cited. Ezel checks the current Internal Revenue Code and IRS guidance against your situation, with citations.

Opens in Ezel Pro.

  • Checks the law as it stands today, not only this page
  • Cites every source it relies on, so you can verify it
  • Chat, drafting and research in one workspace